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.
L.A. home prices today: more or less affordable?
With the RHPI standardized at 100 to represent home prices in 2000, Los Angeles home prices were more of a burden in June than they were 16 years ago, the report shows. L.A. now holds a Real Price Index of 107.2.
L.A.’s index rose 1.2 percent since June 2015 and 0.5 percent compared to May.
On the flipside, real house prices declined year-over-year across 27 out of 43 metropolitan areas tracked, First American says. San Francisco, a notoriously pricey homebuying locale, was one of the top metros for real house price drops and improved affordability.