Zillow: Housing Affordability at Worst Levels Since 2009
By Maggie Wilson @ Real Estate Daily
July 17, 2018

Affordability in the housing market is at its lowest point since 2009. A combination of high home prices, rising mortgage rates, and inadequate housing supply are creating an extremely strained housing environment. What’s worse is that these factors are playing off each other to sustain increased competition in the housing market.

Mortgage rates are a big concern for homebuyers today. Rates have been hovering under 4% for the past several years, but that is changing rapidly. Experts predict rate to reach 5% within the next year. For homebuyers, the mixture of elevated home prices and rising mortgage rates mean less affordability month-by-month.

Key Takeaways

  • Monthly mortgage payments required 17.1% of median income in the first quarter, the highest percentage since 2009
  • The income needed for monthly mortgage payments increased 1.2% in Q1 2018
  • In cities like San Jose, the mortgage payment for a median home is upwards of 50% of the median income


Both rising mortgage rates and strong home value appreciation resulted in one of the largest quarter-over-quarter increases in the mortgage burden for homebuyers since the Great Recession, according to Zillow. For the first time since 2009, monthly mortgage payments require 17.1 percent of the median income in the first quarter.

The income needed for monthly mortgage payments increased 1.2 percent in the first quarter of 2018 compared to the fourth quarter of 2017 where 15.9 percent of the average income was spent on monthly mortgage payments. While this number is high, it is still less than the historic (1985-2000) average of 21.1 percent.

“Mortgage payments haven’t required such a large share of median income since the second quarter 2009, when monthly costs for the typical U.S. home required 17.5 percent of median income,” the report noted.

In some cities, mortgage payments for the median home is more than 50 percent. San Jose leads the list of these cities where a mortgage payment is worth 51.2 percent, much higher than the area’s historical average of 35.8 percent. In Miami, the average mortgage affordability in the first quarter of 2018 came in at 24.5 percent, up modestly from the average 20.3 between 1985 to 2000.

View the original article at Miami Agent Magazine