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Mortgage Payments are Unaffordable in Half of America's Largest Markets

Homes for sale in the six largest California metros have unaffordable mortgage payments

- The median price of homes for sale is higher than the median home value of all homes in all but three of the largest 35 U.S. metros.

- Monthly mortgage payments on for-sale homes in Los Angeles require 46.8 percent of the median income.

- Monthly payments for the median-valued U.S. home require 16 percent of the median income.

Jun 9, 2017

SEATTLE, June 9, 2017 /PRNewswire/ -- Buying the typical home listed for sale in more than half of the nation's 35 largest markets will require a greater share of income than the median-valued home required historically, according to a new Zillow® analysisi.

One reason this home shopping season is so difficult for buyers is that the homes available for sale are generally more expensive than the median home value of all homes in the same market.

As home prices recovered and surpassed the peak values reached during the housing bubble, concerns about housing affordability also returned, despite low mortgage rates keeping monthly payments relatively affordable. The large down payments that come with high prices are a significant barrier to homeownership, and the monthly payments are taking up a larger share of income as well.

Nationally, mortgage payments on the median home for sale require 20 percent of the median income.

"Homes have gotten so expensive in many major cities that even with low mortgage rates, monthly costs for homes that are currently for sale are starting to be unaffordable," said Zillow Chief Economist Dr. Svenja Gudell. "Down payments are a top concern for today's homebuyers, but the reality is that monthly costs are becoming unaffordable as well. Low inventory is pushing sticker prices higher, and when mortgage rates start to rise, monthly payments will be driven further into unaffordable territory."

Los Angeles homebuyers have to spend the highest share of income on mortgage payments – the typical home for sale would require 46.8 percent of the median income. In the years leading up to the housing bubble, Los Angeles homebuyers would have had to spend 35.2 percent of their income on mortgage payments for the typical home.

Cleveland homes for sale are more affordable than homes were historically. The median list price of about $144,000 would require 12.7 percent of the median income for monthly mortgage payments. In pre-bubble years, paying the mortgage on the typical Cleveland home required 20 percent of the median income.

Metropolitan Area

 % Income
Spent on
Mortgage - List
Price, Q1 2017

 % Income
Spent on
Mortgage -
ZHVI, Q1 2017

 % Income Spent
on Mortgage -
ZHVI, 1985-2000

United States

20.0%

15.9%

21.0%

New York/Northern New Jersey

29.3%

26.9%

29.7%

Los Angeles-Long Beach-Anaheim, CA

46.8%

43.3%

35.2%

Chicago, IL

18.5%

14.9%

22.8%

Dallas-Fort Worth, TX

22.9%

15.2%

20.4%

Philadelphia, PA

15.1%

14.9%

20.0%

Houston, TX

21.6%

13.1%

15.3%

Washington, DC

20.2%

18.6%

22.3%

Miami-Fort Lauderdale, FL

30.1%

22.2%

20.0%

Atlanta, GA

17.8%

13.1%

19.1%

Boston, MA

26.7%

24.0%

26.2%

San Francisco, CA

40.2%

42.6%

38.3%

Detroit, MI

14.2%

11.6%

16.6%

Riverside, CA

27.9%

25.9%

26.5%

Phoenix, AZ

22.5%

18.8%

21.3%

Seattle, WA

24.7%

25.5%

25.2%

Minneapolis-St Paul, MN

18.4%

15.4%

18.4%

San Diego, CA

39.6%

35.5%

34.1%

St. Louis, MO

13.1%

11.9%

16.1%

Tampa, FL

21.5%

17.1%

18.7%

Baltimore, MD

17.3%

16.4%

21.4%

Denver, CO

27.3%

23.2%

21.9%

Pittsburgh, PA

12.9%

11.3%

15.5%

Portland, OR

27.6%

25.2%

22.5%

Charlotte, NC

22.6%

14.2%

18.3%

Sacramento, CA

29.1%

25.7%

28.6%

San Antonio, TX

22.5%

13.2%

17.7%

Orlando, FL

23.2%

18.2%

20.4%

Cincinnati, OH

14.6%

12.0%

19.3%

Cleveland, OH

12.7%

11.6%

20.0%

Kansas City, MO

16.1%

11.5%

20.1%

Las Vegas, NV

22.8%

19.2%

25.9%

Columbus, OH

16.3%

12.5%

20.0%

Indianapolis, IN

14.5%

11.4%

20.8%

San Jose, CA

39.3%

43.3%

36.0%

Austin, TX

22.9%

18.3%

18.9%

Zillow
Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ:Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

______________________________
i For mortgage affordability, Zillow assumed a 20 percent down payment and a 30-year, fixed-rate mortgage at prevailing mortgage rates pulled from the Primary Mortgage Market Survey® provided by Freddie Mac. We considered the median value of all homes in a given market – even those not listed for sale – and the median price of those actually listed for sale.

 

SOURCE Zillow

For further information: Lauren Braun, Zillow, press@zillow.com


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