Record home prices and slow growing incomes are two of the driving factors affecting mortgage affordability for so many today.
A median household would need to spend 32.1 percent of its income on mortgage payments for a median-priced home, according to the Federal Reserve Bank of Atlanta. That marks the highest percentage since November 2008, according to the Wall Street Journal.
Growing incomes and low interest rates typically boost the market for mortgages, particularly for homebuyers purchasing their first home. But record housing prices have wiped out gains in other areas.
The national median listing price rose to a record-high $385,000 in July. But American’s incomes have only grown by 3 percent, from the previous July to a median of $67,031. Incomes just can’t keep up with rising home prices.
The percentage of income needed to make mortgage incomes on a median-priced home has grown noticeably this year. At the beginning of the year, that mark was 29.1 percent. The Wall Street Journal reported since then, it has grown at least slightly every single month, reaching 32% by July.
Ironically, in recent months, it has become easier for homebuyers to get a mortgage. Fannie Mae and Freddie Mac begun approving loans from borrowers with lower credit scores.
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