Worst Home Affordability in Thirty Years

According to the National Association of Realtors home-affordability index, it’s harder to afford to buy a home now that it’s been in over three decades. That means homes are harder to buy now than they were in 2008 during the great recession. This is because there’s a larger gap between how much buyers can qualify to borrow and what homes are priced at.

What’s even more troubling, is index calculation was based on June 2022 numbers, before the FED raised the the interest rates another .75% in July which will likely make matters worse. The Fed is expected to raise rates again in September which will likely make affordability even worst because with each increase in rates, the amount of money home buyers can borrow goes down.

The big question that no one seems to be asking, is since homes are harder to afford now than they were in 2008 when the Florida housing market crashed, can we expect to see a similar situation happen again? Will Florida home prices drop 40-60% again? If so, when might that happen?

From the Wall Street Journal…