Skip to main content

Consumer-Friendly Real Estate Information? Look Past The National Surveys.

By Dan Green

Looking For Homes In Alderaan Places? – Today's Mortgage & Real Estate News

Home affordability studies say that California is the most expensive and parts of the Midwest are the least expensive, but that doesn’t help home buyers much; today’s mortgage rates for conforming, FHA, jumbo, USDA, and VA loans; and, all about the intended audience for the S&P CoreLogic Case-Shiller Home Price Index.

What If You Live Somewhere “Unaffordable”?

15 Least Affordable U.S. Cities - NAHB - Growella
California: Home To The 15 Least Affordable U.S. Cities

6 million homes are expected to change hands this year. And, something most home buyers learn is this: buying a home can be costly, but not as costly as you originally imagined.

Especially when low- and no-down payment loans are involved.

A recent study from the National Association of Home Builders (NAHB) showed a drop in home affordability nationwide as compared to a year ago, the result of higher mortgage rates since last quarter and a lift in U.S. home values.

The report includes data from approximately two hundred-fifty metropolitan areas. It measures local household incomes against local prices of homes to determine whether a local home buyer could qualify for a mortgage based on a typical home’s expected monthly payment.

“Affordable” cities are ones where incomes are relatively high and housing costs are relatively low.

The trade group’s study shows that the 15 least affordable U.S. cities in 2018 are each in California; and, the seven highest are each in the Midwest.

But, this data isn’t necessarily actionable.

Just because a home is affordable in Iowa, or near the Ohio/West Virginia border, a home buyer isn’t just going to pack up and move there. People rarely move just to find a cheap mortgage payment somewhere. They move for new jobs, new families, and new opportunities in life.

This is where home affordability studies fall short. They’re great for PR, but not much else. You’re going to live where you’re going to live — regardless of what it costs.

The question isn’t always “can I afford to buy here?” Usually, it’s “Should I rent or should I buy”, and to answer that, you’ll want to talk with a lender.

Low- and no-down payment loans help households with good income, yet low cash savings, get into homeownership; and, there are more than 600 down payment assistance programs available to buyers nationwide to make it easier to buy that first house.

Don’t assume you can’t afford to buy a home. You can’t make that choice until you’ve accessed all of your available options.

And, you’ll want to connect with a mortgage loan officer.

Today’s Mortgage Rates

5-Day Mortgage Rate Trend - Growella
The 5-Day Mortgage Rate Trend

Today’s home buyers and refinancing households are catching a break into the weekend.

The morning’s release of the April 2018 Non-Farm Payrolls report shows weaker-than-expected workforce participation size.

The report also showed a slowdown in the number of new jobs added to the economy.

Mortgage rates are falling for government-backed mortgage loans and jumbo products.

Today’s mortgage rates are moving as follows:

The mortgage rate quote you get from a lender won’t be the same quote your neighbor receives.

Mortgage rate quotes are individualized and depend on close to a dozen factors including loan size, credit score, and the state in which you live.

Mortgage rates are also affected by how you pay your closing costs.

Choose to pay discount points and a full set of costs, and your lender will quote you lower mortgage rates, on average. Opt for your lender’s zero-closing cost option, and you’ll be shown a rate that’s slightly higher.

Either choice can make sense so talk to your lender about whether zero-closing cost mortgage loans are right for your goals.

Get A Free Zero-Closing Cost Quote

Click For Rates!

Local Real Estate Data Matters Most For Buyers

The CoreLogic Case-Shiller S&P Home Price Index
The CoreLogic Case-Shiller S&P Home Price Index suits economists better than home buyers

For great real estate data, you’ll want to go local.

Each month, about a half-dozen real estate reports are published by research firms nationwide. The various reports, which aim to track home values on a national basis, are geared at economists, policy-makers, and traders on Wall Street.

They’re not meant for Main Street. As consumers, we see this data online and in the news and have to train ourselves to look past it.

National housing data is irrelevant when you’re buying a home locally. A home in Seattle has very little do with a home in Miami.

Instinctively, we get this. However, it helps to look deeper into how national housing data is compiled to understand why it doesn’t matter to buyers and sellers like us.

Take the CoreLogic S&P Case-Shiller Home Price Index, for example. It’s a well-known tracker and frequently cited in the news. It’s unfriendly to consumers for three main reasons.

The first reason is data composition. The home values used in the index calculation of whether home prices are rising or falling is based on sold homes, but only for homes that are single-family homes, unattached to all other homes, which have previously been sold.

Condos and multi-unit properties , and new construction homes, are specifically excluded from the Case-Shiller Index.

The second reason is data geography. The Case-Shiller Index pulls home sale information from just twenty cities nationwide. They’re not the largest twenty cities, either. Data from Tampa and Minneapolis are included in the index. Data from Houston and Philadelphia are not.

And, third, is the data age.

The Case-Shiller Index uses a home’s sale price to determine its value, which is sensible. However, a home that sells today has been under contract for up to 90 days; and, the Case-Shiller Index researchers require additional time to compile and publish their results.

As a result, the CoreLogic S&P Case-Shiller Index includes home sale prices from as many as five months ago, and the real estate market from December is useless to buyers in May.

Home value trackers are great for people and professionals who want high-level looks at housing. That’s not you and me.  We’re more interested in what’s happening underfoot, in our towns and on our streets.

So, when you’re looking for data on homes, talk to a real estate agent who can help you make sense of the local numbers to help you find a better home.

Connect with a real estate agent through us.

Written by Dan Green

Dan Green is a personal finance expert and the founder of Growella. His expertise has been cited by The Wall Street, NPR, and CNBC; and, his advice has helped millions of people make better choices with their money. Dan hosts the mortgage news show "The Mortgage Minute-and-a-Half" three times weekly on YouTube.

Dan Green Growella Headshot