Black Knight, formerly known as Black Knight Financial Services, just released its latest report on US home prices, affordability, foreclosure rates, mortgage rates, etc. and this report could not have been more upbeat. Utilizing its integrated technology, services, data and analytics, Black Knight indicated that affordability reached a 19-month high in mid-July 2019.
Ben Grabaske, Black Knight’s Data and Analytics president, said, “For much of the past year and a half, affordability pressures have put a damper on home price appreciation. Indeed, the rate of annual home price growth has declined for 15 consecutive months. More recently, declining 30-year fixed interest rates have helped ease some of those pressures, improving affordability considerably.”
As 30-year fixed interest rates fell from a 7-year high in November 2018 to 3.75% in July 2019, it took 21.3% of median household income, not the 23.3% of median household income last November, to make principal and interest payments on an average priced home. This is the lowest share of household income in the last 18 months.
Grabaske said, “This has changed the affordability landscape significantly. Whereas nice states were less affordable than their long-term norms back in November, only California and Hawaii remained so in in July 2019.”
Equally meaningful, “…despite the average home price rising by $12,000 since November 2018, today’s lower fixed interest rates have worked out to a $108 lower monthly payment when purchasing an average-priced home with a 20% down payment.” This translates into increased buying power equivalent to 15% or $45,000 “more house” while still keeping payments the same as they would have been last fall.
Additionally, “after 15 consecutive months of decline, the national home price growth rate for June remained at the same level as May 2019…3.78%.
Black Knight also pointed to the lowest share of foreclosure activity of ANY QUARTER ON RECORD in Q2 2019.