San Francisco, meanwhile, saw prices spike by 31% between February 2020 and April 2022, meaning the subsequent 5.9% drop has provided scant relief for prospective buyers in that market.
There may be a sliver of good news in the likelihood of borrowing costs beginning to fall at some point this year, although any decrease will probably be mild, according to Odeta Kushi (pictured top), deputy chief economist at First American Financial.
“I think for this year, in this higher-for-longer environment that we find ourselves in, affordability will remain a challenge. I think generally speaking if rates come down by the end of the year, which is still my baseline expectation, we’ll get a little bit of a boost in affordability,” Kushi told Mortgage Professional America.
Mortgage rates rose for the first time in four weeks, according to Freddie Mac’s latest Primary Mortgage Market Survey.https://t.co/lC4LFmlAsF
— Mortgage Professional America Magazine (@MPAMagazineUS) May 31, 2024
Prospect of multiple Fed cuts becoming increasingly unlikely
While house price appreciation is also expected to cool slightly, with income growth to remain positive, mortgage rates likely won’t decline enough this year to substantially change the outlook for many would-be buyers.
“We should see some improvement in affordability by the end of the year but not meaningful changes… unless we see mortgage rates come down a lot more, which is not my baseline expectation,” Kushi said.
