Much has been written about housing affordability and the impact it is having on the overall economy. A new study by Relator.com finds that housing costs are high but not in crisis territory just yet…(Realtor.com)
Payments are rising. Looking at the most recent data from May 2021, they find that homebuyers devoting nearly 21% of their income to home payments.
- This is higher than the monthly average for the past ten years (19.6%). However, it is lower when compared to 2018 (22%) and 2008 (25%).
Trouble on the horizon. However, rising home prices and the potential for rising mortgage rates mean that typical monthly costs could reach levels that have been historically challenging.
- Realtor.com estimates that July homebuyers likely spent 22.4% of their income on housing payments.
There is some room for growth. But not much. Using May’s home sales prices, if mortgage rates increased to 3.4% that would push payment shares over 23.9% of median income. This would break the 2018 record. However, if rates increase to 4.2% this would exceed the 2008 historical high.