A buyer who could afford a $457,000 home in March 2019 could afford a $508,000 home today
In Dallas and Portland, Oregon the share of homes affordable for a $2,500 monthly payment increased, while Phoenix and Las Vegas have fewer affordable homes even with lower rates
A dramatic drop in mortgage interest rates, driven by coronavirus fears, has given homebuyers a big boost in purchasing power in recent weeks, according to an analysis from Redfin, (www.redfin.com), the technology-powered real estate brokerage.
At a mortgage interest rate of 3.2%, a homebuyer with a $2,500 monthly mortgage budget could afford a home that is $51,250 more than in March of 2019 when rates were 4.4%. Put another way, a buyer who could accord a $457,000 home in March of last year could afford a $508,000 home today.
“Potential homebuyers now have an extra incentive to buy a home despite all of the economic uncertainty from the coronavirus,” said Redfin chief economist Daryl Fairweather. “And, many current homeowners now have the option to refinance their mortgages and gain some extra spending cash each month. Low interest rates won’t help with direct impacts of the coronavirus on the economy like declines in tourism and service sector spending, but they will mitigate impacts to housing.”
The boost in purchasing power comes at a welcome time for homebuyers who have been facing major inventory crunches and intense bidding wars in many markets. In January, the housing supply fell 11% year over year, and there were fewer homes for sale than any time since January 2013.
Despite there being fewer homes for sale in most markets, the share of homes for sale that were affordable on a $2,500 monthly payment nationally increased 1.9 percentage points from 68.6% between March 4 and March 10, 2019 to 70.5% between March 2 and 8, 2020.
The markets where homebuyers are experiencing the biggest boost in the share of affordable inventory compared to a year ago were Dallas (+6.2 points), Portland, OR (+5.2 points), and Richmond, VA (+4.3 points).
“I just had a buyer who was at the top of his budget lock in a 2.99% mortgage rate and he is ecstatic at how much more flexibility his finances will have thanks to the interest rate drop,” said Portland Redfin agent Meme Loggins. “Another one of my buyers was looking at condos just a few weeks ago because he didn’t think he could afford a single family home, but thanks to the low rates he can now. Homebuyers in every price range are excited, even those looking at homes priced well over $1 million. Unfortunately we are still facing competition on every offer, which leads us to drop contingencies and offer above list price. With the inventory crunch, these low rates are definitely adding to the frenzy.”
Despite the drop in mortgage rates expanding the range of homes that buyers can afford, the share of affordable inventory on a $2,500 payment fell 3.6 points in Phoenix, 3.4 points in Las Vegas and 1 point in Orlando from a year ago.
Metro-level data is available in the table below and the complete report and methodology are available at https://www.redfin.com/blog/mortgage-rates-drop-on-coronavirus-fears.
Share of Homes for Sale Affordable on a $2,500 Monthly Payment
Metro Area | Total Homes for Sale, March 4-10, 2019 | Total Homes for Sale, March 2-8, 2020 | Share of Homes Affordable on a $2,500 Payment, 2019 | Share of Homes Affordable on a $2,500 Payment, 2020 | Change in Share of Homes Affordable, 2019 to 2020 |
Dallas, TX | 18,195 | 15,597 | 69.6% | 75.8% | 6.2 pts |
Portland, OR | 6,335 | 4,835 | 49.9% | 55.1% | 5.2 pts |
Richmond, VA | 3,244 | 2,515 | 76.6% | 80.9% | 4.3 pts |
Milwaukee, WI | 4,397 | 4,276 | 80.6% | 84.8% | 4.2 pts |
San Diego, CA | 7,576 | 4,889 | 19.7% | 23.7% | 4.0 pts |
Nashville, TN | 11,083 | 9,983 | 72.4% | 76.1% | 3.7 pts |
Minneapolis, MN | 8,838 | 8,214 | 69.6% | 73.2% | 3.6 pts |
New York, NY | 35,344 | 33,128 | 26.2% | 29.7% | 3.5 pts |
Columbus, OH | 5,563 | 5,206 | 82.0% | 85.4% | 3.4 pts |
Seattle, WA | 6,125 | 3,841 | 23.1% | 26.2% | 3.1 pts |
Raleigh, NC | 6,742 | 5,921 | 74.9% | 78.1% | 3.1 pts |
Louisville, KY | 3,057 | 2,756 | 84.0% | 86.8% | 2.9 pts |
Chicago, IL | 27,981 | 24,325 | 71.6% | 74.4% | 2.8 pts |
Denver, CO | 7,206 | 5,498 | 44.8% | 47.7% | 2.8 pts |
Charlotte, NC | 11,513 | 10,019 | 77.2% | 80.0% | 2.8 pts |
Miami, FL | 20,443 | 16,650 | 55.7% | 58.4% | 2.7 pts |
Birmingham, AL | 4,751 | 3,991 | 84.3% | 87.0% | 2.7 pts |
Houston, TX | 28,013 | 26,255 | 77.5% | 80.0% | 2.5 pts |
Jacksonville, FL | 8,891 | 7,259 | 79.2% | 81.7% | 2.5 pts |
Austin, TX | 7,426 | 5,684 | 69.1% | 71.4% | 2.3 pts |
Hartford, CT | 4,882 | 4,558 | 86.6% | 88.8% | 2.2 pts |
Providence, RI | 5,296 | 4,433 | 73.7% | 75.9% | 2.2 pts |
Riverside, CA | 18,185 | 13,082 | 62.7% | 64.8% | 2.2 pts |
Atlanta, GA | 26,234 | 22,649 | 76.5% | 78.6% | 2.1 pts |
San Jose, CA | 2,325 | 1,595 | 2.3% | 4.3% | 2.0 pts |
Kansas City, MO | 6,870 | 4,918 | 80.7% | 82.7% | 2.0 pts |
Baltimore, MD | 10,200 | 8,640 | 75.4% | 77.2% | 1.8 pts |
Sacramento, CA | 5,060 | 4,008 | 49.8% | 51.5% | 1.7 pts |
New Orleans, LA | 4,264 | 4,036 | 79.9% | 81.5% | 1.6 pts |
San Antonio, TX | 9,638 | 8,671 | 84.7% | 86.2% | 1.6 pts |
Boston, MA | 7,884 | 7,504 | 34.0% | 35.5% | 1.5 pts |
Virginia Beach, VA | 6,871 | 5,201 | 85.3% | 86.7% | 1.4 pts |
Detroit, MI | 5,016 | 4,707 | 92.1% | 93.3% | 1.2 pts |
Oklahoma City, OK | 4,948 | 4,286 | 86.0% | 87.2% | 1.2 pts |
St. Louis, MO | 8,799 | 7,167 | 87.7% | 88.8% | 1.0 pts |
Indianapolis, IN | 5,361 | 4,125 | 83.2% | 84.1% | 0.9 pts |
Buffalo, NY | 1,986 | 1,585 | 90.2% | 91.0% | 0.9 pts |
Cincinnati, OH | 7,873 | 6,506 | 85.8% | 86.1% | 0.4 pts |
Memphis, TN | 2,950 | 2,447 | 86.2% | 86.4% | 0.2 pts |
Pittsburgh, PA | 8,374 | 7,802 | 88.0% | 87.8% | -0.2 pts |
San Francisco, CA | 1,686 | 1,667 | 1.8% | 1.6% | -0.3 pts |
Tampa, FL | 16,616 | 11,845 | 80.5% | 80.2% | -0.3 pts |
Cleveland, OH | 7,960 | 5,883 | 89.7% | 89.2% | -0.4 pts |
Philadelphia, PA | 7,033 | 6,231 | 81.4% | 80.8% | -0.6 pts |
Los Angeles, CA | 19,772 | 13,949 | 19.9% | 19.3% | -0.6 pts |
Salt Lake City, UT | 3,621 | 1,511 | 63.4% | 62.6% | -0.8 pts |
Washington, D.C. | 13,321 | 11,059 | 55.5% | 54.5% | -0.9 pts |
Orlando, FL | 11,562 | 8,634 | 79.7% | 78.7% | -1.0 pts |
Las Vegas, NV | 12,057 | 8,143 | 80.8% | 77.4% | -3.4 pts |
Phoenix, AZ | 24,664 | 15,339 | 71.5% | 67.8% | -3.6 pts |
National | 883,656 | 738,139 | 68.6% | 70.5% | 1.9 pts |
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry’s lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 90 major metro areas across the U.S. and Canada. The company has helped customers buy or sell homes worth more than $115 billion.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin’s press release distribution list, email press@redfin.com. To view Redfin’s press center, click here.
SOURCE Redfin
