The most affordable market in the world

Plus, Consumers vs experts + A 'double whammy'

͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌  April 23, 2022 | Issue #39

Good morning! This week we're talking about the most affordable housing market in the world, mortgage rate misconceptions and inflation — plus, places where rent is getting cheaper. The most affordable housing market in the world Getty Images With home prices in the United States higher than they've ever been, it is hard to argue that housing here is affordable. However, a report out this week reminds us that everything is relative. Researchers from the Urban Reform Institute and the Frontier Centre for Public Policy rated middle-income housing affordability in major markets across eight nations: Australia, Canada, Hong Kong, Ireland, New Zealand, Singapore, the United Kingdom and the U.S. The authors measured housing affordability by dividing the median home price in a market by the median household income. The result is the number of years' worth of income someone needs to buy a house. Their findings?   In Hong Kong, the least affordable market, it takes more than 23 years' worth of income to buy a median priced home. Australian markets have a median multiple of 8 years.  The median multiple in the U.S. is 5 years, the lowest of any nation measured. The report acknowledges that things are changing fast, and the housing situation probably doesn't feel great for buyers anywhere right now. The number of markets considered "severely unaffordable" is up 60% compared to 2019, the last pre-pandemic year, and there are currently 27 such markets in the U.S. alone. But if you're a U.S. buyer who has been outbid on multiple listings or watched your buying power shirk as rising mortgage rates, maybe there is some comfort in knowing that people in other parts of the world might see the market here as a downright steal.  At least you're (probably) not trying to buy a house in Hong Kong. Not comforted? You could always move to … Pittsburgh. Consumers vs experts Freddie Mac's closely watched measure of the average rate on a new 30-year fixed-rate mortgage hit 5.11% this week — a full two percentage point increase in 2022 alone. Rates haven't been that high since 2010 and have not increased at such a fast pace since 1980.   So maybe it is not surprising that a survey conducted by the New York Federal Reserve shows most households expect the average rate to keep climbing to a whopping 8.2% by 2025. Real estate experts, on the other hand, have a brighter view. Most see rates sticking to a range of 4.5% to 5.5% over the next few years. Experts are sometimes wrong, of course. I hope they aren't this time. If consumer's expectations come true, it would be the first time the average 30-year rate crossed 8% since the year 2000. For more details: People Think Mortgage Rates Will Cross 8% By 2025. Here's What Experts Say A 'double whammy' Ben Mounsey-Wood for Money Inflation. It's why your summer travel costs feel extra steep this year and why that first hamburger of the season might come with a side of dread. In an already expensive housing market, inflation is also causing a "double whammy" of rising home prices and rising mortgage rates. All of this makes buying a home harder, but not impossible — if you take the right approach. In her latest story for Money, Aly J. Yale offers five tips for buying despite the headwinds. Number one? Buy ASAP. Cheaper (but not cheap) rent Getty Images Across most of the country, rent prices are surging. Maybe that's why Money's most popular story this week was a look at places where rents are actually cheaper than they were before the pandemic. In San Francisco, for example, the price of a studio is down 13% compared to March 2020, while a one-bedroom costs 3.3% than it did back then. Of course, San Francisco is still not a cheap place to rent or buy or really do much of anything — the median rent there is $2,982, according to Realtor.com. Unfortunately, the same can be said for the other places featured in this story. Related from around the web: The New York Dream of Cheap Rent and No Roommates? It's Over. Happy hunting, P.S. Share your inflation hacks with me on Twitter @samsharf or via e-mail at sam.sharf@money.com. P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this e-mail or send them to the Money Moves subscription page. Money's Essential Home Buying Resources: Spring 2022 On the hunt? Check out Money's Mortgage Calculator, list of The Best Mortgage Lenders and look at the latest mortgage rates Thinking of refinancing? Our list of The Best Mortgage Refinance Companies can help. You can also use our Mortgage Refinance Calculator or these refi tips Key question: How much house can I afford?

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