MReport February 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

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46 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Priced Out? How much do values need to rise to cost more than 100,000 people a chance at homeownership? T he National Asso- ciation of Home Build- ers (NAHB) released its 2020 priced out estimates report and it casts an ominous shadow over the future fate of home prices. Data shows that if the average price for a new home raises by just $1,000, at least 158,857 homeowners would be entirely priced out of the housing market. According to the report, home- owners would no longer be able to qualify for the mortgages based on their current incomes. These statistics stretched across the na- tion, showing that although the homeowners would have been able to quality before the increase, following the rise in home prices, they were kicked out of conten- tion. The report also broke down the states and metropolitan areas would be most affected by this pricing out predicament, as it varied widely across the nation. This wide-scale makes sense, as most of the factors that contrib- uted to certain areas being priced out more than other involved the sizes of the local population living within the areas, as well as the affordability of the new homes. Texas accounted for the most priced-out consumers following a $1,000 home price increase. This means that an estimated 14,143 households could be tossed out of market viability. The Lone Star State was followed by Florida, which boasted a stat of 10,274 households being priced out, and then California, which posted a stat of 8,870 households being affected. As for the metro areas expe- riencing the most pain in the priced out arena, according to the numbers, the New York-Newark- Jersey City demographics showed that 6,172 households would be rendered incapable of qualifying for a mortgage on a new home purchase with the same $1,000 increase in price tag. Experts ex- plained this result due to the fact that this metro area already boasts hefty, near beyond reach home prices that are only affordable to roughly 13% of the population before the price increase. Hence, following the $1,000 increase, there were barely any of the remaining households that would qualify for mortgages. Add to this the fact that the New York metro area also happens to be the largest populated, boasting 7.4 million households, the numbers speak for themselves. The other metro areas that followed fast on the heels of New York and its surroundings included Chicago-Naperville- Elgin, Illinois, then Houston-The Woodlands-Sugar Land, Texas.

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