Housing Market Indicators to Watch for First-Time Buyers

A yellow lab dog lying on a doormat

Housing availability, housing starts, home sales, oh my! Understanding the housing market and what it might mean for you includes having a good understanding of the indicators that research analysts track. In addition, a good buyer knows how to interpret these indicators to help choose the right time to buy. In this week’s blog, we explore just a few housing market indicators that are important for first-time home buyers in North Carolina to know about, so you can get a leg up on buying your first home.

Home Ownership Affordability
Home ownership affordability is much more than just guessing how many people in a location can afford to buy a home. In truth, home ownership affordability is determined by looking at the incomes of people in a specific area, and comparing that with the amount of income needed to get a loan in that same place. For example, if there are many high-cost homes in an area and the majority of people who live there couldn’t afford to buy those homes, housing affordability is low. On the other hand, if incomes are high and the home prices are lower, housing affordability would be high. What does this mean for you? Finding a home in an area of high home ownership affordability could mean that there is a balance between the cost of living and wages, making the area a good candidate to consider from a financial perspective.

Home Prices
It may seem odd to look at home prices as a market indicator—after all, all houses are different and will come at different price points. However, when you’re looking at home prices in this context, take into consideration the average cost of an average home. You’re not only considering this number to figure out how much you will likely spend on a home in a given location, but looking at home prices over time can tell you whether property values are increasing or decreasing. This number can help you decide if you want to buy a home in a specific neighborhood or pass it up for a space where home values are increasing in value over time.

Housing Starts
Housing starts indicate how much construction has begun on new homes. In an area with a high population density, this number might be low because much of the available space has already been developed. However, if significant housing starts are beginning in an area, it can be seen as an indication of investment in a location that may continue for years to come. If you are looking for a home in an up-and-coming area, the number of housing starts might be a great indicator to focus on.

Mortgage Originations
While housing starts refer to the number of homes that have begun construction, mortgage originations can be seen as the number of mortgages that have been started to buy homes in an area. This number is more than just an idea of how competitive your market may be, it’s a good number to show whether there is a lot of interest in investment in that neighborhood. For example, if the number of mortgage originations is high for your area, you can assume that there are many buyers who want to call that place home. If mortgage originations are low, it might mean that the area is priced too high for buyers to afford, that there is little interest in that location or many other things.

There are many more housing market indicators out there, but deciding when and where to buy your first home is a decision only you can make. The NC Housing Finance Agency has resources for first-time home buyers that can help make the process of buying a home easier and more affordable through down payment assistance, tax credits, competitive rates and more. Learn more about all the ways the NC Housing Finance Agency can help make home ownership happen for you at www.NCHomeAdvantage.com.