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Marco Santarelli is an investor, author, Inc. 5000 entrepreneur, and the founder of Norada Real Estate Investments – a nationwide provider of turnkey cash-flow investment property. His mission is to help 1 million people create wealth and passive income and put them on the path to financial freedom with real estate. He’s also the host of the top-rated podcast – Passive Real Estate Investing.
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Many prospective buyers, especially those with limited financial resources, are eager to hear whether and when home prices will become more accessible. While this may appear to be an oversimplification, this is how markets operate. The quarterly housing outlook pulse poll conducted by Freddie Mac assesses public attitudes on housing-related problems.
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Average House Price by State in 2022
However, rapidly rising home prices also elevate concerns about affordability, especially for potential homebuyers who might struggle with the higher downpayments that higher home prices often entail. Home prices have soared since the start of the pandemic, as documented in our new State of the Nation’s Housing report. An interactive chart released in conjunction with the report shows that rapid price increases were incredibly widespread in markets across the country. Summer survey reported lowering their monthly mortgage budget or not changing their home search criteria in response to lower mortgage rates. The other three-quarters said low rates would enable them to make a change to their home search, and the most commonly cited change was buying a larger home in a nicer neighborhood. The housing market forecast for 2022 by Realtor.com® was released in June as a mid-year update.
According to Redfin, the seasonally-adjusted inventory of homes has declined by over 50 percent since February 2020. For example, the Census Bureau estimates that the inventory of for-sale homes has declined by 37 percent since 2019Q4. Meanwhile, asking rental prices, as measured by the Zillow Observed Rental Index , initially fell during the pandemic but have since recovered and now exceed their pre-pandemic trend .
Typical home price in Rhode Island: $443,482 (103% of typical U.S. price)
Home values increased 20% in the twelve months between April 2021 and May 2022. Meanwhile, the median household income in the United States is $67,521 a year. This means the median family can only afford a mortgage of around $250,000 and may find themselves being priced out of owning a home. Canadian mortgage rates have been rapidly rising as Canada’s inflation rate remains elevated at 6.9% as of October 2021. While inflation has been cooling off in recent months, largely due to aggressive rate hikes by the Bank of Canada, the Canadian housing market has also experienced an easing in home prices. Meanwhile, Canada’s New Housing Price Index has declined on a monthly basis for the first time since November 2019.
New Brunswick saw its average home price increase by 6% year-over-year to $266,204, while Nova Scotia's average home price increased 10% year-over-year to $385,756. PEI's average home sold price declined by 3% year-over-year to $357,521. Mortgage payments are high despite Oregon residents earning 13% more than the national average. Incomes are 22% less than the national median, but the median house price is less than half of the typical U.S. price. Homes in Connecticut cost less than the typical price across the country while the median income in the state beats the U.S. median by 20%.
This reversal made CMHC insurance more accessible, making it easier for borrowers to qualify for a CMHC-insured mortgage. At the same time, an increase to the mortgage stress test benchmark rate effective June 1, 2021, has made it harder to qualify for a mortgage. As fixed-mortgage rates rise above 4.00%, pushing the mortgage stress test well above 5.25%, prospective homebuyers will start to see a decrease in their mortgage affordability. Home price appreciation is expected to ease throughout 2022, starting the year off at double-digit rates and slowing to 3.5% by December. Given the latest projections for inflation, when home price growth is adjusted for inflation, it could be close to zero at the end of 2022.
When comparing a full year of home prices, it can be useful to show the average of the growth rates for an entire year. When using the annual average growth in the nominal index, 2021 had the fifth-highest increase in home prices. Iowa has very low housing prices, mortgage rates, and a median income 1% above the national median. Those factors help it rank near the bottom in terms of how much residents spend on a mortgage. Here are the typical home prices in all 50 states, the typical value of a single-family home, and the average mortgage rate as of early August 2021. In addition, we've calculated how much an average mortgage payment in each state would cost in comparison to its median income.
After whipsawing in tremendous fashion in early 2020, the housing market more than regained its early-year momentum to finish at new highs for home sales in the fall. For the year, we expect 2020 home sales to register slightly higher (0.9%) than the 2019 total thanks to the strong, if delayed, buying season. Additionally, as make-up buying from the disruption of spring 2020 fades, home purchases will be propelled by underlying demand in 2021. This demand will come from a healthy share of Millennial and Gen-Z first-time buyers as well as trade-up buyers from the Millennial and older generations.
In Ontario, the Real Estate Council of Ontario regulates real estate transactions and helps resolve complaints against real estate agents. In B.C., the Real Estate Council of British Columbia regulates real estate transactions and helps resolve complaints against real estate agents. In Canada, there are over 130,000 real estate agents across all the provinces and territories.
In Maryland, the average mortgage payment is just barely able to meet the 28% rule. That’s despite housing prices just below the national median and median income 40% above the national median. While Alabama has a low median income (19% below the national median), its typical house prices are even lower. But as with so much data during the pandemic, past relationships are no guarantee of future dynamics, and the risks are two-sided. As input prices resettle to more normal levels and as the pandemic demand dynamics fade, we expect any pressure from housing inflation to eventually dissipate.
Housing prices are unlikely to fall drastically, but they are expected to rise very slowly as compared to last year's pace. A typical home in Arkansas costs $169,867 and measures 1,792 square feet. Homeownership in the state is slightly higher than the national average, with 66.5% of residents owning their homes. Colorado's homes are among the nation's largest, with the average home measuring 2,126 square feet.
The median income is 2% lower than the U.S. median, but residents still don't need to spend too much of that income on their mortgages. Florida homeowners spend nearly 45% of their median income on their mortgages. It's a somewhat high figure caused by a median income 15% below the national median.
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