Hot housing market fuels decline in affordability
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HARTFORD, Connecticut (Hartford Business Journal) — Hartford is among the five housing national markets nationwide that saw the biggest declines in affordability since June due in part to pandemic-related factors, according to a new report.
First American Financial Corporation measured the price changes of single-family properties across the U.S. adjusted for the impact of income and interest-rate changes for its First American Real House Price Index, released today.
Hartford was in the top five metro areas nationwide for drops in affordability, with a decline of 4%. Las Vegas ranked first with a 4.9% decline. The only other East Coast city in the top 5 was Providence, with a 3.8% drop.
Prices rose in many many markets even as incomes fell, mostly due to a shortage of inventory, the report said. Lockdowns imposed during the pandemic exacerbated the trend in the middle of the year.
“As potential homebuyers emerged from the stay-at-home orders implemented early in the pandemic, the housing market began to heat up once more,” First American Chief Economist Mark Fleming said. “Affordability declined in 24 of the top 50 markets we track.”
“With the current supply of homes for sale even tighter relative to demand, it can only be characterized as a super-sellers’ market today,” Fleming added.
Drops in mortgage rates failed to offset the affordability loss from faster home-price appreciation in markets like Hartford, according to First American.
In 2021, a strong sellers’ market is expected to continue as the economy improves and mortgage rates remain near historic lows, so rising incomes may not offset appreciation and affordability may see further declines, the report said.
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