What difference does $1,000 make? In your listing price, a lot, actually.
Nationally, a $1,000 increase on a new, median-priced home removes more than 200,000 households from the marketplace, according to the latest estimates from the National Association of Home Builders’ “Priced Out” study.
The NAHB study, which is based on national mortgage underwriting standards (a 28 percent debt-to-income ratio) and the latest income distribution data from the U.S. Census Bureau’s American Community Survey and the U.S. Department of Housing and Urban Development, looked at more than 300 metro areas to see how the costs of construction translate to home price and affordability.
The NAHB analysis found that every $833 in fees added in the construction process, such as for permits, added an additional $1,000 to the final home price.
The number of affect households varies across states and metro areas, depending on population, income distribution and new-home price. Among states, the number of households who would be no longer able to qualify for a mortgage based on the $1,000 increase to a median-priced home ranged from a 313 in Wyoming, the lowest state, to 18,250 in Texas, the highest. In affordable metro area, where roughly half the households can afford new homes, the price-out effects can be large; the additional $1,000 disqualifies more than 4,000 homes in both the Houston-Sugarland- Baytown and Atlanta-Sandy Springs-Marietta metros and more than 2,000 in the Las Vegas-Paradise metro.
For more info on the report and how home-price increases affect mortgage qualification, visit nahb.org/pricedout2014.
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