First American has released the newest edition of its Real House Price Index, which reflects inflation factors such as shifts in income and mortgage rates.
According to the report, the influence of better wages and declining interest rates shows that even though prices are close to peak in many major metros, consumers are gaining buying power.
Despite reports of affordability waning in major metros across the nation, First American found real house prices are 38.5 percent below their peak seen in 2006 and 17.3 percent lower than 2000.
Without factoring income and interest rate changes, First American reports home prices are just 2.6 percent away from the 2007 housing peak.
First American says foreign financials are helping affordability in the U.S. as more investors are turning toward U.S. Treasury Bonds. As a side effect, treasury yields are keeping mortgage rates low for prospective homebuyers.
With the RHPI standardized at 100 to represent home prices in 2000, Chicago holds a Real Price Index of 59.4.
The current index reflects a 2 percent year-over-year drop, proving that Chicago home prices are less of a financial burden than they were last year and in 2000. However, Chicago home prices rose between May and June by 1 percent.
Out of 43 metropolitan areas, 27 saw year-over-year drops in real house prices, illustrating that the majority of cities are becoming more affordable for homebuyers.
