Posted on 04/21/2023 11:36:05 AM PDT by ChicagoConservative27
Monthly housing payments hit a record high this week after mortgage rates rose for the first-time in more than a month, according to data from real estate brokerage Redfin.
The average 30-year fixed rate mortgage jumped to 6.39 percent this week, pushing up the typical homebuyer’s monthly payment to $2,538. At the same time a year ago, the average mortgage rate stood at 5.11 percent.
This week’s rise in mortgage rates followed a dip in the number of new homes under construction, which could put even more pressure on would-be buyers.
“There’s not much on the shelves to choose from, and high mortgage rates and still-high prices are making homes too expensive for many buyers,” Redfin Deputy Chief Economist Taylor Marr said in a news release.
“Some buyers are discouraged by mortgage rates rising this week, which is partly due to stronger-than-expected bank earnings making it more likely the Fed will hike interest rates next month,” he added
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Lenders instruct people that they can afford a home whose monthly payment is 1/3 of their gross monthly income. That is crazy.
What’s crazy about that?
Just millennials living above their means.
First time homes don’t need to be half a million.
Granted finding reasonable prices on homes that aren’t on lease land is hard.
Theft by unresticted money creation.
Same standard I had to comply with when I bought my first house in 1966.
Same standard I had to comply with when I bought 2nd house in 1989.
Bought this house in 2005 with profits of selling 2nd house.
NO MORTGAGE
the thing is, in many, many parts of the country (not just California), homes under $500k may be hard to come by.
and for those areas with homes under $300k? they likely have lower wages/salaries, so it’s not like buyers a getting that great of a deal if they move from a HCOL area to a LCOL area.
the ratio of median home price to median family income in your particular area matters - and right now, in pretty much every part of the county, that’s at an all-time high right now.
it’s actually higher. the back-end (meaning all debts, housing and non-housing) limit for FHA loans is actually 41%.
If I’m a borrower grossing $5k/month with no outstanding debt, I could be approved for an FHA loan with a $2k monthly payment.
Excellent point.
If you compare housing prices to incomes now, vs. housing prices to incomes in the past, it’s eye opening.
For example, my parents bought their first house for $12,000 in 1955. My dad was earning about $6,000 a year then. Mom didn’t work. Dad earned about 50% of the price of the house.
My parents bought their 2nd house for $31,000 in 1963. Dad made about $15,000 then. That house today is worth about $650,000 per sites such as Zillow.
The $15,000 Dad made in 1963 is about $148,000 today adjusted for inflation. Dad couldn’t afford the same house today in today’s money. Mom would have had to work for them to afford the mortgage. Housing costs are a key reason so many mothers work today, because 1 income isn’t enough to buy a house.
All one has to do is look at median household income vs median home price. Its becomes more horrible when you realize it is more common to have two incomes these days, yet it is still becoming more unaffordable.
When I was in CA, even two incomes were never enough thanks to the mortgage and other prices increasing... We struggled for years...It was like living on a tightrope.
We bailed out and within 2 years Democrat inflation hit...If we were still in CA, we’d be financially dead. No joke.
So glad I’m out of that CA money rat race.
I lived in Orange County, CA in the early 1980s (moved there from the East Coast).
Even then a half-decent house was way out of my price range—I also hated the tiny lots typical of southern CA—just seemed like a total ripoff.
I gave up—took a job back east for a similar salary.
I walked into the local real estate agent’s office in my new location. He asked me how much I made. I told him. He laughed and said “On that salary you can afford any of my listings.”
Crazy stuff.
You’re probably fortunate for not buying...I’m a CA native, but I got to the point where I cursed the house and the ground it stood on. Everything kept going up but the wages/incomes...It became a slow death, and no matter what, it just got worse.
You think it’s a good idea to pay half of your net income to a mortgage?
The issue is the lender criteria for issuing mortgages, not what I think is a good idea. I’ve heard it’s common for lenders to go to 33 oercent of gross income for a mortgage, and 38 percent of gross including the mortgage and other debts someone has.
As to whether it’s a good idea it depends on other things such as your household budget, your earning capacity, whether you’re getting a fixed rate mortgage.
What criteria are you referring to? I’m referring to mortgage calculators and such.
I’m also referring to mortgage calculators , and how mortgage lenders decide whether to approve a loan.
Well, on rare occasions, there are other expenses which must be paid in addition to a thirty year mortgage. HVAC, roof, lawn maintenance, major appliances, furnishings, utilities, and transportation, to name just a few. Then there is the all important savings for emergencies and retirement. Perhaps some may wish to take a vacation or two during the 30 year mortgage.
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