Key Factors Affecting Home Affordability in Pensacola, FloridaToday

By
Real Estate Broker/Owner with Charles Stallions Real Estate Services

Every time there’s a news segment about the housing market, we hear about the affordability challenges buyers are facing today in Pensacola. Those headlines are focused on how much mortgage rates have climbed this year. And while its true rates have risen dramatically, it’s important to remember they aren’t the only factor in the affordability equation.

 

Here are three measures used to establish home affordability: home pricesmortgage rates, and wages. Let’s look closely at each one.

1. Pensacola Mortgage Rates

This is the factor most people are focused on when they talk about homebuying conditions today. So far, current rates are almost four full percentage points higher than at the beginning of the year. As Len Kiefer, Deputy Chief Economist at Freddie Mac, explains:

“U.S. 30-year fixed mortgage rates have increased 3.83 percentage points since the end of last year. That’s the biggest year-to-date increase in rates in over 50 years.”

That increase in mortgage rates is impacting how much it costs to finance a home purchase, creating a challenge for many buyers that are pricing some out of the market. While the current global uncertainty makes it difficult to project where mortgage rates will go in the future, experts do say that rates will likely remain high as long as inflation does.

2. Home Prices

The second factor at play is home prices while they may have topped out as for Pensacola the buyers are still much in the driver's seat but sellers are still getting market prices. Home prices have made headlines over the past few years because they skyrocketed during the pandemic. Now, the most recent Home Price Index from S&P Case-Shiller shows home values continued to decelerate for a fifth consecutive month (shown in green in the graph below):

 

This deceleration is happening because higher mortgage rates are moderating demand, and as a result, easing the buyer competition and bidding wars that previously drove prices up.

What’s worth noting though, is how much higher home prices still are than they were before the pandemic (shown in blue in the graph above). Even now, we have a long way to go to get to more normal levels of home price appreciation, which is historically closer to 4%. When both mortgage rates and home prices are high, affordability and purchasing power becomes a more significant challenge.

But while prices are still elevated in many markets, some areas are seeing slight declines. It all depends on your local market. For insight into what’s happening in your neighborhood, reach out to a trusted real estate professional.

  1. Wages

The one big, positive component in the affordability equation is the increase in American wages. The graph below uses data from the Bureau of Labor Statistics (BLS) to show how wages have grown over time. This year is no exception.

 

As the Bureau of Labor Statistics (BLS) reports:

Median weekly earnings of the nation’s 120.2 million full-time wage and salary workers were $1,070 in the third quarter of 2022 (not seasonally adjusted), the U.S. Bureau of Labor Statistics reported…This was 6.9 percent higher than a year earlier

So, when you think about affordability, remember the full picture includes more than just mortgage rates. Home prices and wages need to be factored in as well. Because wages have been rising, they’re a big reason why serious buyers are still purchasing homes this year.

If you have questions or want to learn more, reach out to a trusted advisor who can explain how all these variables work together and what’s happening in your area. As Leslie Rouda Smith, President of the National Association of Realtors (NAR), says:

Buying or selling a home involves a series of requirements and variables, and it’s important to have someone in your corner from start to finish to make the process as smooth as possible… and objectivity to deliver trusted expertise to consumers in every U.S. ZIP code.”

Bottom Line

To learn more, reach out to a trusted real estate professional and a local lender so you’re able to make an informed decision if you’re planning to buy or sell a home right now.

Bottom Line "There Is A Realtor For That"

If you’re ready to buy or sell a home Charles Stallions with over 27 years of experience will give you expert advice on your specific situation.

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