Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Between 1985 and 2000, the monthly mortgage payment on a typical American home (after 20 percent down) represented about 20 percent of monthly median household incomes. By the end of 2012, that had fallen to roughly 12.6 percent.
But at 5 percent mortgage interest rates and assuming homes in these metros appreciate in line with Zillow’s Q1 2013 home value forecasts, homes in half a dozen markets will look more expensive than their historic norms on a monthly payment basis: San Jose, Calif. (22 percent more expensive); Los Angeles (19 percent more expensive); San Diego (14 percent more expensive); San Francisco (11 percent more expensive); Portland, Ore. (7 percent more expensive); and Denver (1 percent more expensive).
At 6 percent, five more major markets become more expensive: Riverside, Calif. (11 percent more expensive); Miami (7 percent more expensive); Seattle (5 percent more expensive); Sacramento (4 percent more expensive); and Washington, D.C. (2 percent more expensive). And, logically, the six markets that were more expensive at 5 percent only look even pricier at 6 percent. In San Jose, for example, at 6 percent mortgage interest rates, homeowners can expect to pay 36 percent more of their monthly salaries on mortgage payments than they were paying between 1985 and 2000.
Yes, rates will remain very low for at least the time being. But it won’t be long before they climb back to 5 percent. Consider some historical context: The average 30-year fixed rate mortgage rate over the past 42 years is roughly 8.5 percent, according to Freddie Mac.
Yea, I only use zillow for property tax record and prior listing prices. I don't take their estimates seriously. My house has a 60k range...thats not an estimate, thats a guess.
As mortgage rates increase that will put downward pressure on housing prices. Nothing new there. The real question is whether incomes will catch up.
"Between 1985 and 2000, the monthly mortgage payment on a typical American home (after 20 percent down) represented about 20 percent of monthly median household incomes. By the end of 2012, that had fallen to roughly 12.6 percent."
The mention of rising interest rates is a good reason considering the average but i would include other factors such as falling/stagnant wages and most job creation is in the low paying sector. Considering all of that together and I think it is a giving that home prices will fall unless the props go on for eternity.
I think that expensive housing areas like San Jose, Orange Co., San Diego are going to burst when interest rates rise a couple more points. I don't know when that will happen but know I wouldn't want to have to sell a house in those areas at that time. High interst will have a geometrically higher impact in Cali than the most of the rest of the country jsut as low interest rates have fueled the latest bubble.
I think with 5 year putting all house lease or buy at 1.1 million units low then price are going to rise.The problem will be that its will take years to catch up as its tightening of lending standards that are the problem. Starting in april if the borrower does not fall within standards the lender can not get rid of the liability for the loan. That is a huge tightening from even what we see now.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.