By: Shmuel Shayowitz
Compared to historical averages, median-priced homes are less affordable in 94% of counties across the country, according to new figures from Attom Data Solutions. The analytics company just released its Q1 2023 U.S. Home Affordability Report, which measured affordability by calculating the income needed to meet major monthly homeownership expenses, such as mortgage payments, property taxes, and insurance – and a standard mortgage debt-to-income (DTI) ratio. This income was then compared to local average weekly wage data from the U.S. Bureau of Labor Statistics, annualized to calculate a typical year’s earnings.
Furthermore, a recent article from NAR (National Association of REALTORS®) shows that greater than 70% of metropolitan areas have seen home prices increase over the first 90 days in 2023. “Due to the intense housing inventory shortage, multiple offers are returning, especially on affordable homes,” said NAR Chief Economist Lawrence Yun. “Price declines could be short-lived.”
Inventory in the first quarter averaged 1,630,000 listings at any given time, a 40% reduction from the first quarter of 2019 – a year before the onset of the COVID-19 pandemic. Families typically spent 24.5% of their income on mortgage payments, down from 26.2% in the previous quarter but up from 19.5% one year ago. First-time buyers typically spent 37% of their family income on mortgage payments, down from 39.5% in the previous quarter. “A mortgage is considered unaffordable if the monthly payment (principal and interest) amounts to more than 25% of the family’s income.”
The housing market continues to show signs of price inflation and continued higher payments. Several clients have lost bids on homes where they submitted offers over 10% above the asking prices! Surprisingly buyer demand continues to significantly outpace supply and cause elevated pricing. Is this sustainable? Is this logical? Is this healthy? These are questions that everyone seems to be grappling with when it comes to buying and selling real estate.
That said, I want to bring another affordability crisis to the forefront. The cost of living in many Jewish Communities continues to surge. Very little is being done to address the inherent issues and equip people with the tools, education, and resources to help them navigate financial overwhelm. I will say, however, that I am proud to be a part of several organizations that are taking a proactive approach to helping Jewish community members with the dire need to address this disconnect. One such organization is The Jewish Entrepreneur (“TJE”). I have been a mentor for several years at TJE and it truly is an incredible organization that provides mentors to entrepreneurs who are looking to grow their businesses at no cost to mentees.
Another fantastic resource where I am also a mentor and coach is Living Smarter Jewish (“LSJ”). LSJ is a non-profit organization dedicated to helping individuals, couples, and families achieve financial freedom by providing access to educational resources and guidance. Launched with the support of the Orthodox Union, in a very short time, LSJ has catapulted into helping an astonishing amount of families with their financial well-being through hands-on guidance and mentorship.
Finally, to further help and support the local Jewish community, I am proud to announce that we are co-sponsoring and hosting a critical talk and discussion with Rabbi Jeremy Wieder of RIETS / YU on the topic of how we can secure our Jewish financial future. On the heels of his recent viral Kosher Money podcast viewed by tens of thousands, Rabbi Wieder will speak and lead a discussion on money, materialism, making a living, celebrating smachot, and the need to create a culture of financial success without excess. Please email me for more information or be on the lookout for further information in the Jewish Link, who is co-sponsoring the event with us.
Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected].
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