There is a continuing dialogue in the country, in Florida and in Manatee County about the price of homes and, of course, the cost of a mortgage.
In this column, in recent weeks, I’ve talked about the influx of new residents to the state, the cost of renovations and the best way to choose a mortgage. So, as I stated last week, since we’re obsessed with mortgage rates, let’s start there.
The average rate for a 30-year fixed-rate mortgage, per Freddie Mac, rose to 6.51% the week of May 18, the highest level since August of last year. The previous week, the rate was 6.36%. This, of course, didn’t make home shoppers very happy, since every uptick in rates reduces their target price range.
Even a small change in mortgage rates can affect a buyer, and a significant change could take a buyer out of the market completely. For example, a buyer qualified for a $400,000 mortgage at 6% might only qualify for a $384,000 mortgage at 6.5%
In February, when the rates dipped to 6%, everyone, me included, thought we were at the beginning of an upswing. That was before the Middle East war started playing havoc with oil prices and worries about inflation. Suddenly, the pool of buyers narrowed and both buyers and sellers had to rethink their positions.
June is National Homeownership Month, which raises awareness about the value of owning a home and making homeownership accessible to all Americans, while highlighting the benefits of homeownership that include building personal and generational wealth and stronger communities. In Florida, the homeownership rate hovers around 68%.
A new analysis from Construction Coverage, a company that uses data from the U.S. Census Bureau, states the last decade of rapid home price growth has severely worsened housing affordability across the United States. Home values surged more than 81% between 2016 and 2026, dramatically outpacing wage growth, which was up 47%, and reshaping housing affordability nationwide.
Locally, home price growth in Bradenton between 2016 and 2026 experienced an increase of $157,466 in the median home price; that is an 80.4% increase in just 10 years. Comparing home price growth with wage growth in Bradenton, the most recent income data shows an increase of 49.8% over 10 years in Bradenton’s median household income.
Sorry if all of these numbers are making you dizzy; however, the bottom line is that wage growth is not keeping up with sales growth in Bradenton and around the country. This is a big affordability issue for buyers wanting to get into a home
Getting back to interest rates: 6.51% was almost identical to the 2002 average of 6.54%. In 1987, the first year I had my real estate license, the average rate was 10.21%; and the year I bought my first house, in 1974, the average rate was 9.195%. Somehow, we all lived through it and didn’t talk nearly as much about interest rates as we do now.
By the way, I keep a record of interest rates from the Freddie Mac archive starting in 1971 and it’s been a good reality check down through the years – something we all need once in a while.
