Rising home prices, mortgage rates, and less available inventory are causing homebuyers to miss out on getting the most bang for their buck this house-hunting season.
Figures determined by the First American Real House Price Index, which measures home price changes adjusted for income, interest rates, and house-buying power, are intended to measure affordability at the national, state, and metro level.
According to Mark Fleming, Chief Economist at First American, a dip in the average rate for a 30-year, fixed-rate mortgage and wage gains increased consumer house-buying power sufficiently to offset the gain in unadjusted house prices.
“The decline is real, and purchasing power adjusted house prices between March and April was the largest month-over-month decline since July 2016 and a respite from the 8-month-long trend of increasing real house prices,” Fleming said.
Although finding the right deal to purchase a home has become puzzling for homebuyers, the combination of home prices and local wages are making some markets more appealing than others.
Cleveland, Ohio topped the list of cities with the max purchasing power with a real home price index of 47.04, a year-over-year change of 9 percent, and a median sales price of $123,525.
Another Ohio city, Columbus, follows with a real home price index of 54.22, a year-over-year change of 9.61 percent, and a median sales price of $160,000.
Look south of Ohio, and Memphis, Tennessee ranks third on the list of cities with a real home price index of 56.4, a year-over-year change of 13.86 percent, and a median sales price of $151,950.
Cincinnati, Ohio follows with a real home price index of 58.92, a year-over-year change of about 6 percent, and a median sales price of $135,000.
The final city to complete the top five is St. Louis, Missouri, with a real home price index of 65.05, a year-over-year change of 11.87 percent, and a median sales price of $143,773.
Homebuyers must think about many aspects before considering which city and state to call home. Purchasing power is in the hands of the buyer, if the homebuyer chooses a more affordable city to live in.