Seattle’s median home price shot up over 500K this past month.
They figured that a single person whould have to have an average salary of 120,000 a year to be able to handle the mortgage payment. That’s fine, except the average income for seattle is less than half of that.
Well, that is the very definition of “housing affordability”. Either salaries will have to skyrocket, or home prices will have to drop significantly, or mortgage rates will have to go back to 1%.
I am betting on home prices dropping significantly.
I believe a lot of the meteoric rise in home prices was due mostly to the availability of very cheap money. Now that the cheap money is gone, how are buyers supposed to maintain the sellers high asking price? They can’t. Sellers must lower their prices to what buyers can qualify for in the absence of Very Cheap Money.
It is simple economics. Home buyers will be furious at the thought, but homes in bubble cities are WAY overpriced and have to come WAY down to allow buyers to purchase them. It is simple economics.