Luxury buyers frequently benefit from accumulated home equity, investment gains and ownership of appreciating assets. They may not need to finance 80% or 90% of the purchase.
Consequently, moving from a 6.3% to a 6.6% mortgage rate may influence their decision but not eliminate their ability to transact.
This helps explain why Buncombe’s average sales price can rise or remain elevated while the median price softens. In January, for example, the median price declined 2.1%, yet the average sales price increased 17.3%, which is consistent with a higher-priced mix of closings influencing the average.
The center: caught between price and payment
The middle market bears the greatest impact of interest rates.
These households may have respectable incomes but are simultaneously absorbing:
- Higher food and service costs
- Childcare
- Insurance
- Vehicle payments
- Student loans
- Home maintenance
- Higher mortgage costs
NAR defines an affordability index of 100 as the point at which a median-income household has exactly enough income to qualify for a mortgage on a median-priced home, assuming its methodology and down-payment requirements.
The Asheville region’s affordability index was only 72 in May, meaning the area’s median household income was substantially below the income theoretically needed to purchase the median-priced home under the report’s assumptions.
That is the central explanation for the middle-market slowdown. Buyers may have good jobs and stable income but still cannot comfortably support the monthly payment associated with prevailing home prices and daily living demands.