High mortgage rates had previously subdued the housing market, peaking at 7.79% nearly a year ago. However, with rates now dropping to 6.2%, buying power has significantly improved. This decrease, noted in a recent report by Hannah Jones from Realtor.com®, has enhanced purchasing capabilities across the U.S.
The Federal Reserve’s recent announcement of a half-point rate cut further supports the rebound in the real estate market. Although the Fed doesn’t set mortgage rates directly, these rates typically follow the Fed’s lead. As a result, potential buyers now have more purchasing power compared to when rates were at their peak in October 2023.
Top Metros with Increased Buying Power
Here are the ten metropolitan areas where buying power has seen the most significant improvement due to falling mortgage rates:
- San Jose, CA
- August 2024 median list price: $1,399,000
- Monthly payment at 6.2%: $6,900
- Monthly payment at 7.79%: $7,900
- Boost in buying power: +$240,600
- Los Angeles, CA
- August 2024 median list price: $1,190,000
- Monthly payment at 6.2%: $5,800
- Monthly payment at 7.79%: $6,700
- Boost in buying power: +$201,900
- San Francisco, CA
- August 2024 median list price: $969,000
- Monthly payment at 6.2%: $4,700
- Monthly payment at 7.79%: $6,300
- Boost in buying power: +$191,300
- Oxnard, CA
- August 2024 median list price: $1,050,000
- Monthly payment at 6.2%: $5,100
- Monthly payment at 7.79%: $6,000
- Boost in buying power: +$182,900
- San Diego, CA
- August 2024 median list price: $999,000
- Monthly payment at 6.2%: $4,900
- Monthly payment at 7.79%: $5,700
- Boost in buying power: +$174,100
- Bridgeport, CT
- August 2024 median list price: $800,000
- Monthly payment at 6.2%: $3,900
- Monthly payment at 7.79%: $5,100
- Boost in buying power: +$154,900
- Boston, MA
- August 2024 median list price: $834,500
- Monthly payment at 6.2%: $4,100
- Monthly payment at 7.79%: $4,800
- Boost in buying power: +$145,900
- Honolulu, HI
- August 2024 median list price: $725,000
- Monthly payment at 6.2%: $3,600
- Monthly payment at 7.79%: $4,600
- Boost in buying power: +$139,200
- Seattle, WA
- August 2024 median list price: $775,000
- Monthly payment at 6.2%: $3,800
- Monthly payment at 7.79%: $4,600
- Boost in buying power: +$138,000
- New York, NY
- August 2024 median list price: $750,000
- Monthly payment at 6.2%: $3,700
- Monthly payment at 7.79%: $4,200
- Boost in buying power: +$127,100
These metrics demonstrate how a reduction in mortgage rates can significantly enhance buying power, particularly in some of the nation’s priciest housing markets.
