With overall home prices holding steady, the markets with the sturdiest values give their homebuyers the most power — a very important factor with a potential purchasing frenzy coming this spring.
Though favorable conditions could dissipate with a swing in demand, right now, mortgage rates remain low and wages continue to grow.
"While 2018 was largely characterized by declining affordability, ending the year with a 5% yearly decline in house-buying power, this trend reversed sharply in early 2019," Mark Fleming, chief economist for First American Financial Corp., said in a press release. "Moderating home prices, in conjunction with gains in household income and declining mortgage rates, boosted affordability for potential homebuyers."
While in cities like Providence, R.I., "real" house prices shot up 17% year-over-year in January, other areas saw such growth below 1%, according to a First American Financial Corp. analysis of home values, factoring in local wages and mortgage rates in large cities.
From the middle of the country to the Pacific Northwest, here's a look at cities where consumers wield the most purchasing power for the upcoming home buying season.
The data, from the First American Real House Price Index, measures annual home price changes, taking local wages and mortgage rates into account "to better reflect consumers' purchasing power and capture the true cost of housing."
The January 2019 data is ranked by smallest year-over-year changes in RHPI for cities where the current value is less than 100 (an RHPI reading of 100 is equal to housing conditions in January 2000).
No. 12 St. Louis, Mo.
Year-over-year RHPI: 8.27% RHPI: 67.79 Median sale price: $156,947
unknown/nixter - stock.adobe.com
No. 11 Memphis, Tenn.
Year-over-year RHPI: 8.19% RHPI: 55.96 Median sale price: $129,580
Memphis, Tennessee, USA downtown skyline.
SeanPavonePhoto - stock.adobe.com
No. 10 Baltimore, Md.
Year-over-year RHPI: 7.57% RHPI: 81.11 Median sale price: $228,750
Baltimore, Maryland - July 24, 2013: Colorful early 19th century homes line Montgomerey Street in the Federal Hill Historic District
Picasa/lspi138 - Fotolia
No. 9 Washington, D.C.
Year-over-year RHPI: 7.41% RHPI: 89.21 Median sale price: $366,726
Old Post Office Pavilion
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No. 8 Boston, Mass.
Year-over-year RHPI: 7.4% RHPI: 86.59 Median sale price: $437,724
jiawangkun - stock.adobe.com
No. 7 Oklahoma City, Okla.
Year-over-year RHPI: 7.21% RHPI: 69.05 Median sale price: $146,625
Panorama of downtown Oklahoma City
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No. 6 Cleveland, Ohio
Year-over-year RHPI: 6.97% RHPI: 50.61 Median sale price: $133,563
CLEVELAND - SEPTEMBER 16: Rock and Roll Hall of Fame and Cleveland, Ohio skyline from the harbor walkway
Paul Brady/pabrady63 - stock.adobe.com
No. 5 Chicago, Ill.
Year-over-year RHPI: 5.82% RHPI: 66.23 Median sale price: $208,952
Aerial view of Chicago, Illinois skyline with Soldier Field.
Ron Chapple Stock/iofoto - stock.adobe.com
No. 4 Hartford, Conn.
Year-over-year RHPI: 4.63% RHPI: 75.13 Median sale price: $207,456
Hartford, CT- OCTOBER 15: The Mark Twain House and Museum on October 15, 2014. It was the home of Samuel Langhorne Clemens (a.k.a. Mark Twain) from 1874 to 1891 in Hartford, Connecticut.
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No. 3 San Diego, Calif.
Year-over-year RHPI: 4.49% RHPI: 95.57 Median sale price: $535,375
San Diego, California, USA downtown city skyline.
SeanPavonePhoto - stock.adobe.com
No. 2 Portland, Ore.
Year-over-year RHPI: 4.06 RHPI: 96.9 Median sale price: $358,750
View of Portland, Oregon from Pittock Mansion.
Josemaria Toscano - Fotolia
No. 1 Seattle, Wash.
Year-over-year RHPI: 0.72% RHPI: 90.04 Median sale price: $445,530
Seattle Public Market Sign, Pike Place Market, Seattle WA, USA
While some industry forecasts predicted origination volumes would fall 7% quarter-to-quarter in 4Q, early earnings numbers from Wells Fargo, JPMorgan Chase, Citi and PNC Bank show they were down just 3% when purchased loans are excluded.
The FHFA and Treasury will allow Fannie Mae and Freddie Mac to hold more capital as part of the Trump administration's plans to release the companies from conservatorship. But it is unclear whether the incoming Biden administration will keep the mortgage giants on the same reform path.