Over half of for-sale homes in seven major U.S. markets are unaffordable for mainstream buyers.
Local residents in Southern California, San Francisco, Miami, Denver, and Portland either don’t make enough money to buy a home or are paying a larger share of their monthly income toward a mortgage, according to a new analysis by real estate experts Zillow.
In San Francisco, for example, nearly 40 percent of a local’s monthly income goes toward their mortgage – when most banks believe you should not devote more than 28 percent. Zillow Chief Economist Dr. Stan Humphries remarked that…
“As affordability worsens, we’re already beginning to see more of the kinds of worrisome trends we saw en masse during the years leading up to the housing crash. These include a greater reliance on non-traditional home financing, smaller down payments and a greater pressure to move further away from urban job centers in order to find affordable housing options.”
A piece of good news that surfaced from this study is just one third of homes (33.6 percent) are currently unaffordable in a variety of metro areas. But then again, as mortgage interest rates increase (as they currently are doing), in concert with home values, the ability to afford a home falls.
Gary Herman, President of Consolidated Credit, warns against overextending when buying a home…
“Don’t let your mortgage payments eat up your monthly income. If you can’t afford the home look for another one – don’t finance a place that will put you in debt. There are options available to you when shopping for the right mortgage that fits your financial situation.”
If you’re in the market to buy a home and could use some professional guidance don’t hesitate to call one of Consolidated Credits certified housing counselors for free. Consolidated Credit is approved by the U.S. Department of Housing and Urban Development (HUD) to provide housing counseling.