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Seattle & Northwest  + National  + Seattle  + Apartments  | 
OC Housing

U.S. Housing Affordability is Quickly Evaporating

Housing affordability improvements brought on by historically low mortgage rates and dampened rent growth are quickly evaporating as housing costs rise faster than incomes. A new Zillow analysis finds these affordability issues are expected to worsen by the end of the year, leaving millions of newly housing cost-burdened people.

Interest rates play a major role in determining monthly payments, a key component of affordability. For the average U.S. homebuyer, rates that began dropping in late 2018 and fell to record lows in January 2021 have kept mortgage payments as a share of income lower than the previous peak in late 2018.

But that’s about to change. Mortgage payments as a percent of income reached 19.4 percent in June, and are forecast to surpass 2018 levels in August. Assuming home values grow in line with Zillow forecasts, that burden could rise to more than 23.1 percent by the end of the year, depending on the path of mortgage rates going forward.

“Strong demand and rising prices for homes are overwhelming the ability of low mortgage rates to keep monthly payments down,” said Nicole Bachaud, Zillow economic data analyst. “As prices continue to outpace income gains, affordability constraints will start to slow home price growth.”

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Nicole Bachaud

About Lisa Brown

Lisa Brown has decades of experience in corporate communications and marketing management with organizations including Coldwell Banker Residential, Grubb & Ellis, Marcus & Millichap, NAIOP, SIOR and ALM. In those positions, she worked in conjunction with chief executive officers and chief marketing officers to create corporate messaging, cohesive branding standards, strategic marketing plans and thought pieces. Brown is a frequent speaker at industry events and an editing adjunct professor for an online course. She has a master’s degree in mass communications from San Jose State University.

  • ◦People
  • ◦Economy
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