RealtyTrac today released a housing affordability analysis showing that the estimated monthly house payment for a median-priced three-bedroom home purchased in the fourth quarter of 2013 — including mortgage, insurance, taxes, maintenance, and subtracting the estimated income tax benefit — increased an average of 21 percent from a year ago in the 325 U.S. counties included in the analysis.
The rise in monthly housing payments came as the result of an average 10 percent rise in median prices across the 325 counties combined with a 33 percent increase in the average interest rate for a 30-year fixed rate mortgage as reported by Freddie Mac in its Primary Mortgage Market Survey.
“A potent combination of rapidly rising home prices and the often-overlooked but significant uptick in interest rates in the second half of 2013 caused the monthly cost of owning a home using traditional financing to jump substantially in many markets over the last year,” said Daren Blomquist, vice president at RealtyTrac.
“One simply needs to look at the minimum income needed to qualify for a median-priced home in some markets to realize the extent of the disconnect between prices and incomes,” Blomquist continued. “For example, in Los Angeles County, the minimum qualifying income needed to purchase a median-priced home is at more than $95,000, up from about $68,000 just a year ago.”
"Home price appreciation continues to climb in the Oklahoma housing market. Regrettably in some instances this escalation in price, compounded with the new qualified mortgage rules, restricts people from purchasing their dream home,” said Sheldon Detrick, CEO of Prudential Detrick/Alliance Realty covering the Oklahoma City and Tulsa, Okla., markets. "The American dream of owning a home still stands though, so potential homeowners will try to buy as soon as they can."
“Utah’s real estate market is based upon strong economic growth with a projected unemployment of 4.2 percent for 2014,” said Steve Roney, president of Prudential Utah Real Estate covering the Salt Lake City, Utah market. “Affordability of homeownership appears to remain a positive factor in our Salt Lake Valley markets with projected prices increases of 5 percent to 7 percent during 2014.”
Despite the increase in costs to buy with financing, the analysis shows that the estimated monthly house payment for a median-priced three bedroom home in the fourth quarter of 2013 was lower than average market rent for a three bedroom home in 91 percent of the counties analyzed (296 out of 325).
But the 29 counties where estimated monthly house payments were higher than fair market rents accounted for 20 percent of the population for all 325 counties analyzed. These 29 counties included the California counties of Los Angeles, Orange, Santa Clara, Alameda, Ventura and San Francisco, along with King County, Wash. (Seattle), Suffolk County and Westchester counties in the New York City region, Will County in the Chicago metro area, and Denver County, Colo.
Among the 15 most populated counties analyzed the estimated monthly house payment increased an average of 34 percent from a year ago, making the house payments higher than the average fair market rent for a three-bedroom home in six of those 15 largest counties. A year ago only one of those 15 counties — Santa Clara County in the San Jose area of Northern California — had an estimated monthly house payment above the average fair market rent.
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