Homebuyer Purchasing Power Down Most in These Cities

It is no secret that supply and demand are out of balance in the housing market. In 12 U.S. cities, homebuyer purchasing power is dwindling as low supply, raging demand, and rising interest rates converge.

First American's home value data takes into account local wages and interest rates, and its findings showed a 5.1 percent price increase for the nation in February 2018. Of the 12 cities listed by National Mortgage News based on this analysis, several were in Ohio (Cleveland, Columbus) and Florida (Orlando, Tampa, Jacksonville), though Las Vegas was the number one city with diminishing purchasing power, with Seattle right behind. Seattle's YOY Real Home Price Index (RHPI) growth of 11.10 percent, and in Vegas, the YOY RHPI growth was 12.94 percent.

The ongoing supply and demand imbalance in the housing market is already making the 2018 home buying season especially competitive. Years of pent-up demand is finally coming to market, creating an overflow of house hunters. Meanwhile, a long run of historically low levels of new home construction has crippled supply. As prices keep rising, existing owners are becoming increasingly reluctant to put their homes on the market.

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