According to Redfin, a Seattle based technology-powered residential real estate company, in July homebuyers purchasing power increased by 6.9%. This thank to the current historically low mortgage rates. As an example, a homebuyer with a monthly budget of $2,500 could afford a home priced $ 33,250 more than a year ago. But there is a catch, according to Redfin, July home prices, year-over-year increased 8.2% higher, fundamentally wiping out all of the increased buying power and then some. In prepared remarks Daryl Fairweather, Redfin Chief Economist said, “Low mortgage rates are motivating many people to purchase a home, particularly those who want more space to work from home. But because there hasn’t been an increase in the number of homes for sale since rates started dropping with the onset of the pandemic, many buyers end up competing for the same homes, driving up prices.”
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Homebuyers on a $2,500 Monthly Budget Can Afford $33,000 More With Low Mortgage Rates, But Higher Home Prices Cancel Out Increase