The health of the real estate market depends on buyers being able to buy. Buyer purchasing power
Question:
The health of the real estate market depends on buyers being able to buy. Buyer purchasing power is key. Why are we doing so well at the moment?
Sometimes, conditions conspire to derail buyer purchasing power. What sort of macroeconomic events will cause that, and how close might we be to such an event?
Jun 2020 | May 2020 | Jun 2019 | |
---|---|---|---|
Buyer Purchasing Power Index (BPPI) | +10.5 | +10.4 | +6.2 |
About the BPPI
The Buyer Purchasing Power Index (BPPI) is calculated using the average 30-year fixed rate mortgage (FRM) rate from Freddie Mac (Western region) and the median income in California.
A positive index number means buyers can borrow more money this year than one year earlier.
A negative index figure translates to a reduced amount of mortgage funds available.
An index of zero means there was no year-over-year change in the amount a buyer can borrow with the same income. At a BPPI of zero, homebuyers cannot purchase at higher prices than one year before unless they resort to adjustable rate mortgages (ARMs) to extend their borrowing reach or greater down payment amounts.
As long-term BPPI trend declines, the capacity of buyers to borrow purchase-assist funds is reduced. In turn, buyers needing purchase.
What kind of Macro Economic Events has Lowered buyer Purchasing Power in the Past?
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts