Mortgage payments taking a bigger bite out of incomes

Mortgage payments taking a bigger bite out of incomes

Mortgage payments taking a bigger bite out of incomes
With home prices continuing to rise at an unprecedented pace in the U.S. home buyers are finding that owning a property may eat up too much of their monthly income. Most financial experts suggest keeping housing expenses to less than 33 percent of one’s take-home pay. But as costs continue to soar, staying within that limit is growing more challenging.

Fifteen major metropolitan markets in the U.S. now have median home prices that exceed 30 percent of the average income in their respective region. This is up from 13 markets last year, according to Point2. Overall, 51 of the 100 largest cities in the U.S. saw a decrease in affordability over the last year compared to just 11 that saw a slight improvement.

In the most unaffordable cities, like San Diego, wage earners would need to increase their annual incomes by at least $40,000 in order to not be burdened by their mortgage.

Today, conforming no-point 30-year fixed mortgage rates are averaging 2.75 percent and 15-year rates are near 2.25 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.