Orla McCaffrey at The Wall Street Journal writes that mortgage payments are getting more and more unaffordable…(Wall Street Journal)
Interest rates aren’t cutting anymore. Home prices skyrocketing across the country are “canceling out the impact of modestly higher incomes and historically low interest rates, two factors that typically make owning a home more affordable…”
How bad is it? At the start of 2021, Americans needed about 29% of their income to cover a mortgage. However, now the median American household would need “32.1% of its income to cover mortgage payments on a median-priced home, according to the Federal Reserve Bank of Atlanta.”
IMPORTANT NOTE: “That is the most since November 2008, when the same outlays would eat up 34.2% of income.”
What happens going forward. Unfortunately, declining affordability will impact first-time homebuyers the most. They will “have to sign up for larger monthly payments, buy less desirable homes or step back from the market altogether, economists said.”