Nov 17, 2022 - Real Estate

Home values would have to fall 36% to return to historical norms

Data: Zillow; Chart: Erin Davis/Axios Visuals

Though our market may be improving a bit for buyers, monthly mortgage payments are still significantly more expensive today.

What's happening: The monthly payment for a typical U.S. home is about $1,850 — $800 (75%) higher than a year ago.

  • That means a median household earning $71,895 a year is spending over 30% of income on monthly payments, per a recent Zillow report.

Zoom in: In Austin, a median household is currently spending about 37% of income on monthly payments, up from an average of 24% during 2005-2021.

  • Current home values would need to fall nearly 36% to go back to affordability levels during that period.
  • That's a big jump from the drop needed nationwide (25%).

Yes, but: It would take a sharp increase in inventory for values to fall that dramatically, something Zillow says is "extremely unlikely."

State of play: Median home prices across the Austin metro hit $474,900 in October, per new data from the Austin Board of Realtors.

The bottom line: Home asking prices may be dropping slightly, but ballooning interest rates mean mortgages are still unaffordable for many house hunters — and it's unlikely they'll be able to bargain shop any time soon.

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