Over the past couple of years, many people in the Conejo Valley and beyond have struggled to buy a home. While affordability remains a challenge, there are encouraging signs that the situation is gradually improving and could continue to get better throughout the rest of the year. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), notes:

“Housing affordability is improving ever so modestly, but it is moving in the right direction.”

Here's a look at the latest data on the three biggest factors affecting home affordability: mortgage rates, home prices, and wages.

1. Mortgage Rates
   Mortgage rates have been fluctuating this year, ranging from the mid-6% to low 7% range. However, there is some positive news. Data from Freddie Mac indicates that rates have been trending downward overall since May.

Recent economic, employment, and inflation data have contributed to the recent improvement in mortgage rates. While some rate volatility is expected moving forward, experts suggest that if economic data continues to show signs of cooling, mortgage rates could keep declining. Even a small drop can make a significant difference, making it easier for you to afford the home you want because your monthly payment will be lower. Just don’t expect rates to return to 3%.

2. Home Prices
The second major factor to consider is home prices. Nationally, prices are still rising this year, but not as rapidly as they did a couple of years ago. The graph below, using home price data from Case-Shiller, illustrates this trend.

If you're considering buying a home in Conejo Valley, slower price growth is good news. Home prices skyrocketed during the pandemic, making it difficult for many to buy. Now, with prices rising more slowly, homeownership may feel more attainable. As Odeta Kushi, Deputy Chief Economist at First American, says:

“While housing affordability is low for potential first-time home buyers, slowing price appreciation and lower mortgage rates could help – so the dream of homeownership isn’t boarded up just yet.”

3. Wages
Another factor contributing to improved affordability is rising wages. The graph below, using data from the Bureau of Labor Statistics (BLS), shows how wages have been increasing over time.

The blue dotted line represents typical wage growth in a year, while the green line on the right side of the graph shows that wages are currently rising faster than usual. This benefits you because if your income increases, it becomes easier to afford a home since you won’t need to allocate as much of your paycheck toward your monthly mortgage payment.

Bottom Line
When considering all these factors together, you’ll notice that mortgage rates are trending down, home prices are rising more slowly, and wages are increasing faster than usual. Though affordability remains a challenge, these trends are early signs that things might be starting to improve, making it a potentially better time to buy a home in the Conejo Valley.

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