Triangle home affordability drops to record low as median prices hit $416K

It has never been less affordable to buy a home in the Triangle.

The home affordability index dropped to a score of 71. It means the typical family only earns 71% of the income needed to buy a typical home.

In July, Triangle MLS data shows the median price for a home in the Triangle was $416,000.

Triangle MLS data shows that in July for Wake County specifically, the median price for a home is $488,250.

Nationwide, the 30-year fixed-rate mortgage averaged 7.09% in the week ending Aug. 17, according to data released from Freddie Mac. A year ago, the 30-year fixed-rate was 5.13%. The average rate is the highest the 30-year, fixed-rate mortgage has been since April 2002 when it was 7.13%.

It comes after a 2,501-square-foot townhouse with three bedrooms and 3.5 bathrooms sold for $1.2 million on Clark Avenue near Raleigh’s Village District.

Housing affordability in the Triangle is at a new all-time low.

“Originally, it was because of the rapid increase in prices fueled by a dramatic lack of inventory and very, very low mortgage rates,” said Triangle MLS Executive Director Matt Fowler. “Then, we had the spike in mortgage rates.”

For example, if someone put down a 20% down payment on a $485,000 home, at today’s interest rate, a monthly payment would be about $3,244.

A year ago, when mortgage rates were lower, the monthly payment would have been about $2,612.

“Interest rates are making it a price-point decision for folks,” said Coldwell Banker HPW Realtor Charles Christiansen.

Christiansen said people looking to buy a home in the current market face less competition than at the peak of the market last summer, but their money doesn't go as far.

“Maybe last year they were looking at a $500,000 home, maybe this year it’s a $430,000 home,” Christiansen said. “So, it has made a difference.”

Christiansen said the drop in affordability is pushing more buyers to hunt for houses further out from the Triangle.

“Johnston County, Granville County [and] Franklin [County], those areas are holding a little bit stronger, because people are moving there and can get a little more bang for their buck,” Christiansen said.

The average household here in Raleigh has lost about $100,000 in buying power in the last year.

“I’ve seen people drop out, but I’ve also seen folks reconsider locations to move to that they’d never thought of before,” Christiansen said.

Chris Brazell is a loan officer with The Sherry Riano Team in Cary.

“You’re going to be making money on the investment in your real estate home now compared to somebody sitting on the sidelines and waiting to chase that rate,” Brazell said.

Brazell recommended keeping credit card balances low and trying to pay off high-interest rate loans when people start preparing to buy a home. He said it will increase a buyer’s affordability.