Estimated monthly mortgage payments in Springfield metro increase 58% in 2 years: Study

A new study from Construction Coverage reports that national average mortgage rates climbed from 3.8% to 6.8% over the past two years, while median home prices rose from $316,778 to $347,716. As a consequence, the monthly mortgage payment for a median-priced home in the U.S. is about 54% higher today than it was two years ago.

While it's still cheaper to buy a home in Springfield, the Queen City is feeling the effects of those numbers as well. According to the study, median home prices in the Springfield metro climbed from $218,565 in 2022 to $246,414 today. Taking this median home price and the average 30-year fixed mortgage rate, estimated monthly mortgage rates in the Springfield metro have increased 58% since 2022: rising faster than the national average.

To put that into dollars and cents, a Springfield metro homebuyer in 2022 could expect an estimated monthly mortgage payment of $811 for a median-priced home. In 2024, a prospective Springfield homebuyer would expect a monthly mortgage payment of $1,282 for a median-priced home.

Why is it getting more expensive to own a home in the Springfield metro?

Greater Springfield Board of Realtors CEO Jeff Kester said it's all about supply, which has been restricted in Springfield. Starting in the early 2010s and continuing into 2019 and 2020, builders began leaving the market. He said the supply of homes in Springfield has simply not caught up to demand, and rising interest rates have further restricted supply.

"People refinance their houses at interest rates that start with two and three, and as rates go up, it diminishes the incentive that those property owners have to sell their house and move to a new one because they're going to be paying a higher interest rate on that new house," Kester said. "So they're more likely to stay put."

And when homeowners stay put, the house isn't available for new owners to buy. When higher prices caused by that lack of supply meet high interest rates, Kester said there is an obvious affordability issue.

"I would say that the housing affordability crisis is the primary issue that we have in housing and probably will for some time," Kester said. "We just need more open minds about what housing can be."

Young people are struggling to buy first homes. What is the solution?

Kester said that as his children grew up, he told them at some point, they should get a grown-up job and buy a house, as it is the number one vehicle for wealth-building.

"But none of my kids could buy a house now because of the affordability issue," Kester said.

More: Springfield has more renters than homeowners. Here's what else the housing study found

As households form in Springfield — meaning young people and transplants move into the area — they are facing an affordability problem. Kester said the problem also extends to rental properties. He said rent has at least doubled in the Springfield area since his first apartment in the city.

Kester said the Greater Springfield Board of Realtors is working with civic leaders and local government to be more creative in terms of housing and zoning policy. He wants to see a Springfield that is comfortable with more homes on a certain segment of land.

"Density is something that has culturally been fought in Springfield, and nobody can afford that anymore," Kester said.

He added that one answer for new homeowners during the affordability crisis will have to be condominiums or multifamily housing. In Springfield, those have historically been rental properties.

"When you look at these large apartment complexes, I tend to ask the questions," Kester said. "'You know, wouldn't it be nice if we could build large complexes like that and have it available for people to buy a condo?'"

This article originally appeared on Springfield News-Leader: Here's why Springfield home prices and mortgage rates are going up