But the national situation varies widely between low and high incomes
Mortgage affordability is being eroded as home prices remain high and interest rates creep up.
A monthly payment for a typical US home needed 17.5% of the median income nationally in the second quarter of 2018 compared to 15.4% in the same quarter of 2017, according to a new analysis by Zillow.
But the increase is still well-below the historic share of income spent on monthly mortgage payments (from 1985 to 2000) which was 21.2%.
"Low mortgage rates have kept first-time homeownership and move-up homes within reach for many Americans, even as home values have soared to new heights," said Zillow Senior Economist Aaron Terrazas. "While mortgage rates remain low by historic standards, they are creeping upward, eating into what buyers can pay, and in a handful of pricey markets, affordability already looks unnervingly low.”
West Coast markets remain unaffordable for many
It does of course depend where in the country the homeowner is and their level of income with those on lower incomes carrying a larger burden than those earning more.
For example, in 10 of the largest markets – 7 of them on the West Coast – the share of income required is higher than the historic level, led by 53.5% in San Jose and 45% in LA.
“Among lower-income buyers in those pricey markets, it is outright impossible to afford the mortgage on even a lower-priced home. As rates rise, both buyers and sellers will have to temper their expectations further," added Terrazas.
Low earners still more burdened in more affordable markets
Things are still harder for low income earners in the most affordable third of the market where mortgage payments require nearly twice as much of the median income for lower-earning buyers (23.9%) than they do for the highest-income buyers (12.9%).
|
Metropolitan Area |
Share of Income Spent On Mortgage (Q2 2018) |
Historic Share of Income Spent On Mortgage (1985-2000) |
Share of Income Spent On Mortgage for Lower-Income Buyers (Q2 2017) |
Share of Income Spent On Rent (Q2 2018) |
Historic Share of Income Spent On Rent (1985-2000) |
Share of Income Spent On Rent for Lower-Income Renters (Q2 2017) |
|
United States |
17.5% |
21.2% |
23.9% |
28.4% |
25.8% |
62.7% |
|
New York, NY |
27.9% |
29.2% |
49.1% |
37.7% |
26.3% |
102.9% |
|
Los Angeles-Long Beach-Anaheim, CA |
45.0% |
34.6% |
83.8% |
46.9% |
36.3% |
121.2% |
|
Chicago, IL |
15.6% |
23.1% |
22.8% |
28.3% |
25.3% |
69.3% |
|
Dallas-Fort Worth, TX |
16.7% |
22.9% |
21.6% |
28.4% |
21.8% |
57.8% |
|
Philadelphia, PA |
16.1% |
20.4% |
20.4% |
27.1% |
21.4% |
65.0% |
|
Houston, TX |
15.1% |
21.1% |
23.4% |
28.8% |
24.4% |
66.1% |
|
Washington, DC |
19.4% |
22.3% |
29.6% |
25.4% |
17.7% |
55.4% |
|
Miami-Fort Lauderdale, FL |
24.9% |
20.3% |
30.5% |
41.5% |
28.6% |
90.7% |
|
Atlanta, GA |
15.2% |
18.3% |
18.9% |
25.4% |
19.3% |
49.2% |
|
Boston, MA |
25.8% |
26.3% |
46.4% |
32.7% |
26.4% |
83.0% |
|
San Francisco, CA |
44.9% |
38.5% |
73.0% |
39.2% |
30.6% |
95.9% |
|
Detroit, MI |
12.9% |
16.0% |
7.6% |
24.4% |
20.0% |
46.0% |
|
Riverside, CA |
28.3% |
27.9% |
45.3% |
36.8% |
32.7% |
74.4% |
|
Phoenix, AZ |
20.2% |
21.1% |
31.4% |
26.4% |
22.8% |
58.6% |
|
Seattle, WA |
28.6% |
25.9% |
42.3% |
30.9% |
23.8% |
64.0% |
|
Minneapolis-St Paul, MN |
16.7% |
17.8% |
27.0% |
25.5% |
21.2% |
56.0% |
|
San Diego, CA |
37.9% |
33.5% |
67.8% |
40.3% |
34.7% |
94.9% |
|
St. Louis, MO |
12.6% |
17.0% |
13.0% |
21.8% |
21.2% |
41.5% |
|
Tampa, FL |
18.7% |
18.8% |
22.4% |
31.0% |
27.6% |
66.2% |
|
Baltimore, MD |
16.0% |
21.6% |
18.9% |
25.6% |
27.0% |
60.2% |
|
Denver, CO |
25.3% |
22.5% |
39.8% |
32.0% |
23.6% |
66.1% |
|
Pittsburgh, PA |
11.7% |
13.8% |
11.7% |
21.9% |
28.5% |
45.8% |
|
Portland, OR |
26.1% |
22.0% |
45.5% |
29.9% |
23.5% |
68.8% |
|
Charlotte, NC |
15.1% |
18.7% |
19.3% |
24.4% |
19.3% |
50.5% |
|
Sacramento, CA |
28.8% |
29.2% |
52.5% |
32.4% |
31.8% |
76.1% |
|
San Antonio, TX |
15.4% |
22.1% |
20.3% |
27.1% |
26.2% |
57.9% |
|
Orlando, FL |
20.2% |
20.6% |
26.7% |
31.5% |
22.7% |
63.7% |
|
Cincinnati, OH |
12.5% |
18.3% |
17.7% |
24.2% |
19.1% |
51.9% |
|
Cleveland, OH |
12.7% |
19.8% |
15.2% |
25.1% |
22.9% |
55.2% |
|
Kansas City, MO |
13.8% |
17.2% |
14.5% |
23.5% |
17.5% |
41.2% |
|
Las Vegas, NV |
22.5% |
26.7% |
30.6% |
27.1% |
24.0% |
57.7% |
|
Columbus, OH |
14.1% |
18.8% |
17.5% |
25.3% |
21.9% |
46.8% |
|
Indianapolis, IN |
12.5% |
21.9% |
14.1% |
24.0% |
21.9% |
43.3% |
|
San Jose, CA |
53.5% |
36.1% |
83.9% |
35.6% |
26.1% |
99.8% |
|
Austin, TX |
19.3% |
28.8% |
30.7% |
26.7% |
23.3% |
61.5% |
