If you own a home, congratulations: You’ve probably made six figures in equity since 2019.
“The typical homeowner accumulated $147,000 in home equity in the past five years,” said National Association of Realtors® Chief Economist Lawrence Yun in the latest quarterly report.
That’s an earnings of $29,400 a year — nearly half the median U.S. wage.
But even with the rapid price growth in recent years, the likelihood of a housing market crash is minimal, according to Yun.
“Distressed property sales and the number of people defaulting on their mortgage payments are both at historic lows,” Yun said.
Prices rose in the third quarter
Gains in home equity were not limited to certain regions of the country either. Approximately 90% of the metro experienced home price gains in the third quarter of 2024 as the 30-year fixed mortgage rate ranged from 6.08% to 6.95%.
Sales prices of existing single-family homes rose in 87% of measured metro areas — 196 of 226 — in the third quarter, up from 89% in the previous quarter.
Fifteen markets – or 7% – experienced digit annual price increase, from 13% in the previous quarter.
“Home prices remain on solid ground as reflected by the large number of markets experiencing gains,” Yun said.
The national median price of an existing single-family home rose 3.1% from a year ago to $418,700, according to the NAR.
South and Northeast lead the way
Where did homes fly the most from listing sites in July through September? Of all sales of existing single-family homes in the US, 45.1% were in the South.
However, the North East came out on top in terms of house prices, with a year-on-year increase of 7.8%.
It was followed by the Midwest, with 4.3%; The West, with 1.8%; and the South, with 0.8%.
The 10 biggest price increases
Homeowners in the Midwest have reason to celebrate as home prices in Illinois skyrocketed in the third quarter.
Four of the top 10 metros with the largest year-over-year average price increases were in the Prairie State.
Every metro in the top 10 experienced double-digit gains of at least 10.6%.
Take a look at them below.
Median list price: $310,200
Average price increase: 13.7%
Median list price: $171,100
Average price increase: 13.1%
Median list price: $262,200
Average price increase: 13%
Median list price: $177,100
Average price increase: 12.4%
Median list price: $191,000
Average price increase: 12.3%
Median list price: $534,000
Average price increase: 11.7%
Median list price: $234,700
Average price increase: 11.5%
Median list price: $201,900
Average price increase: 11.1%
Median list price: $142,200
Average price increase: 10.9%
Median list price: $399,700
Average price increase: 10.6%
The most expensive markets in the US
When it came to the most expensive markets in the US, it’s no surprise that eight of the top 10 were in pricey California.
But Hawaii and Colorado also made cuts in the third quarter.
Scroll down for the chic locations where homes will appeal the most to buyers, along with the average year-over-year price increase (or decrease).
Median list price: $1,900,000
Average price increase: 2.7%
Median list price: $1,398,500
Average price increase: 7.2%
Median list price: $1,309,000
Average price increase: 0.7%
Median list price: $1,138,000
Average price increase: 7.2%
Median list price: $959,800
Average price increase: 1.5%
Median list price: $949,800
Average price increase: 6.7%
Median list price: $947,500
Average price increase: 5.6%
Median list price: $947,400
Average price increase: 2.8%
Median list price: $832,200
Average price drop: -3.0%
Housing affordability improves
Housing affordability has been a major issue in recent years, but it improved slightly in the third quarter as mortgage rates edged lower.
The monthly mortgage payment for a typical existing single-family home with a 20% down payment was $2,137, down 2.4% from a year ago.
Households typically spent 25.2% of their income on mortgage payments, down from 27.1% year over year.
“Housing affordability has been a challenge, but the worst seems to be over,” Yun said.
Wage growth is now outpacing home price growth, according to Yun.
“Despite some short-term changes, mortgage rates are set to stabilize below last year’s levels,” Yun noted. “More inventory is hitting the market and providing additional options for consumers.”
Good news for first-time buyers
Of course, homes are still expensive – but first-time buyers experienced slightly better affordability conditions compared to the previous quarter, which offered a glimmer of hope.
For a typical $355,900 starter home with a 10% down payment, the monthly mortgage payment fell to $2,097, down 5.5% from last quarter.
That was down $49, or 2.3%, from a year ago — meaning payments are moving in the right direction.
Most home buyers have heard of the “30% rule,” which recommends that they spend no more than 30% of their income on a home.
However, the high price of housing means that this is no longer feasible today,
First-time buyers typically spent 38% of their household income on mortgage payments, up from 40.6% in the previous quarter.
How much home buyers had to earn for the same QUALIFY for a mortgage like this?
A household needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 42.5% of markets, up from 48% in the previous quarter.
However, there are still options out there for people who earn less – even if they are few and far between.
In 2.2% of markets, a household needed a qualifying income of less than $50,000 to afford a home — down from 2.7% in the previous quarter.
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Image Source : nypost.com