"Even more striking, in several high-cost coastal metros, not even a 0% mortgage rate would make the median-priced local home affordable for a household earning the local median income. This includes New York, Los Angeles, Miami, San Francisco, San Diego, and San Jose, where taxes, insurance, and maintenance on a median-priced home alone can often consume more than 10% of a median household's income."
""Holding incomes, [U.S.] home prices and all other housing-related costs equal, mortgage rates would need to drop to 4.43% in order for a typical home to be affordable to a buyer making the median income, assuming they put 20% down. That kind of a rate decline is currently unrealistic," wrote Zillow economic analyst Anushna Prakash. Prakash added that: "If buyers are waiting for big drops in mortgage rates or [U.S. home] prices to help affordability, they're in for a rude awakening. Just like falling rates, that kind of correction in house prices won't happen without a serious slowdown in economic growth and income growth, and a rise in the unemployment rate.""
A drop of more than one percentage point to roughly 4.43% on a 30-year mortgage would be required for a median-income U.S. buyer to comfortably afford the median-priced home, assuming a 20% down payment. Several high-cost coastal metros remain unaffordable even at a 0% mortgage rate because taxes, insurance, and maintenance can consume over 10% of median household income. Many Midwestern markets already have mortgage rates low enough for median-income buyers to afford local median-priced homes. Achieving the needed rate decline is unlikely in the short term without a significant economic slowdown and rising unemployment.
Read at Fast Company
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