If you have a budget where you can spend $3,000/month on a mortgage, which many do not, you have lost $71,000 in buying power in just one year!
Bidenomics!
Historically high mortgage rates are cutting into buyers' budgets. A homebuyer on a $3,000 monthly budget, for instance, can afford a $429,000 home with a 7.4% mortgage rate, roughly the daily average on August 23. That buyer has lost $71,000 in purchasing power since August 2022, when they could have bought a $500,000 home with an average rate of about 5.5%.
Same payment, same money in the bank. But it's able to purchase much less of a house.
This graph, which is interactive on Redfin's site, shows how the interest rate hikes on mortgages absolutely tank your buying power.
Let's be honest, the average family is looking at less than half of that $3,000 payment for their budget. So, if you can pay $1,500, your purchasing power comes in at about a $200,000 house vs. a $260,000 house a year ago.
This is the shift in just one year.
And you wonder why people think (and some hope) a housing crash happens again?
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