Housing affordability hits 15-year low as prices and mortgage rates rise

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“Mortgage rates jumped unprecedentedly over the past two weeks and quickly multiplied housing costs as they rose,” economist Zillow said. Nicole Bachaud. “We are already seeing signs of falling demand and expect these recent rate hikes to accelerate the necessary rebalancing of the market. purchase has decreased.”

Incomes are further lagging behind rapidly rising mortgage costs, leading to the biggest affordability challenges of the past 15 years. Latest data available from April shows monthly payments4 taking around 28% of owners’ monthly income – dangerously close to the 30% threshold, beyond which is considered a financial burden. With rates now well above the April average, that share is already at or very close to 30%. Zillow data for this measure is available through 2007; the Atlanta Federal Reserve Homeownership Affordability Monitor shows that affordability bottomed out in July 2006.

Although rents have skyrocketed since the start of 2021, the rapidly rising cost of a mortgage still makes rent the cheapest option almost everywhere. A typical rent payment in May is more expensive than a mortgage payment (with a 20% down payment), including taxes and insurance, in only five of the 50 largest US metros. In May 2019the rent was more expensive in 28 of these metros.

After annual price appreciation set new records for 13 consecutive months, home values ​​finally turned their backs in May to post a slightly slower pace of annual growth: 20.7%, down from 20.9% in April.

“Coming in the middle of the spring selling season, this deceleration is a clear signal that buyers are reducing demand for homes in the face of significant affordability challenges,” said Jeff Tuckersenior economist at Zillow.

The trend seems to show that the market has exceeded a inflection point for home values ​​between April and May, moving from ever warmer to somewhat cooler price growth. The typical American house is now worth $349,816 – almost $60,000 more than last year and almost $95,000 higher than in May 2020.

Sales are also slowing down. The number of listings for sale under contract in May is down almost 20% from 2021, when this activity was near a four-year high, and is 2% lower than in May 2019. The median time on market for new listings is just seven days – stable since April and even since last May.

The share of listings with a price drop is also rising, to 11.5% in May from a recent low of 8.5% in February.

The inventory of listings for sale continued its spring climb and is now just 14.2% below its level of a year ago. Still, that leaves buyers with 50% fewer options than they had to choose from in May 2019.

Typical rents go up to $1,979 in the United States and continues to increase rapidly, with monthly growth of 1.2% which slightly exceeded the monthly increase of 1.1% in April. To put that into context, the average monthly rent growth in May from 2014 to 2019 was 0.7%. The annual rental appreciation in May is 15.9%, after peaking at 17.2% in February.

Metropolitan
Area*

Zillow
House
Assess
Index
(ZHVI)

ZHVI
Year-
More-
Year
(Annual)
To change

Monthly
Mortgage
Payment
on a
Typical
House**

Monthly
Mortgage
Payment
on a
Typical
House
Annual
To change

Newly
Pending
Transactions
Annual
To change

Zillow
Observed
Lease
Index
(ZORI)

ZORI
Annual
To change

To share
of
Advertisement
with
a
Price
To cut

United States

$349,816

20.7%

$2,031

47.3%

-19.6%

$1,979

15.9%

11.5%

New York, NY

$609,114

13.0%

$3,595

37.5%

-23.6%

$3,121

20.8%

9.1%

Los Angeles, CA

$948,029

20.6%

$4,870

51.6%

-23.9%

$2,922

16.1%

9.6%

Chicago, IL

$309,940

14.6%

$1,983

37.1%

-20.1%

$1,945

11.0%

13.6%

Dallas–Fort
Worth, TX

$390,505

30.3%

$2,549

55.3%

-5.7%

$1,791

17.7%

10.2%

Philadelphia, Pennsylvania

$332,772

13.5%

$2,026

37.2%

-20.6%

$1,846

11.2%

12.8%

Houston, TX

$306,192

23.2%

$2,032

46.4%

-21.1%

$1,575

11.7%

13.4%

washington d.c.

$554,922

10.2%

$2,980

37.1%

-21.9%

$2,231

11.6%

11.0%

Miami–Fort
Lauderdale, Florida

$445,739

30.0%

$2,651

57.9%

-32.7%

$2,862

31.0%

9.3%

Atlanta, Georgia

$375,674

30.5%

$2,111

60.5%

-26.3%

$1,938

16.7%

12.4%

Boston, MA

$659,089

15.0%

$3,709

41.4%

-25.8%

$2,788

12.1%

8.0%

San Francisco, California

$1,500,189

18.5%

$7,702

49.0%

-16.5%

$3,214

10.3%

8.3%

Detroit, Michigan

$241,645

15.0%

$1,491

38.6%

-14.5%

$1,423

11.3%

11.7%

Riverside, California

$585,904

26.0%

$3,202

56.0%

-16.5%

$2,613

15.9%

12.6%

Phoenix, AZ

$476,098

29.0%

$2,487

61.6%

-12.2%

$1,937

19.1%

13.3%

Seattle, WA

$794,576

24.8%

$4,269

55.2%

-8.4%

$2,265

15.5%

10.0%

Minneapolis
-St. Paul, Minnesota

$377,615

12.3%

$2,203

37.0%

-18.8%

$1,657

6.5%

10.3%

San Diego, California

$936,472

26.2%

$4,857

58.2%

-18.0%

$2,999

19.7%

10.6%

St. Louis, Missouri

$242,392

14.7%

$1,468

38.7%

-18.2%

$1,281

11.3%

9.5%

Tampa, Florida

$375,460

36.5%

$2,233

65.8%

-18.5%

$2,089

25.2%

12.9%

Baltimore, MD

$374,947

11.1%

$2,078

37.1%

-18.0%

$1,808

9.8%

11.9%

Denver, CO

$646,964

23.6%

$3,394

54.5%

-8.3%

$1,988

14.2%

11.2%

Pittsburgh, Pennsylvania

$212,781

11.8%

$1,313

34.8%

-16.8%

$1,361

8.4%

13.8%

Portland, OR

$588,606

18.7%

$3,222

46.8%

-19.5%

$1,873

12.5%

12.6%

Charlotte, North Carolina

$380,090

31.1%

$2,090

62.1%

-25.5%

$1,779

17.7%

12.1%

Sacramento, California

$623,735

21.0%

$3,341

50.6%

-14.2%

$2,281

10.1%

14.9%

San Antonio, TX

$335,423

25.4%

$2,145

50.1%

-25.0%

$1,469

14.9%

12.3%

Orlando, Florida

$386,180

33.4%

$2,238

62.9%

-20.5%

$2,040

23.7%

10.6%

Cincinnati, Ohio

$259,655

16.0%

$1,567

40.4%

-16.6%

$1,455

11.9%

10.4%

Cleveland, Ohio

$216,396

15.1%

$1,390

37.7%

-14.3%

$1,370

11.0%

10.3%

Kansas City, Missouri

$285,599

15.6%

$1,723

40.0%

-18.8%

$1,347

11.0%

8.4%

Las Vegas, Nevada

$446,534

32.4%

$2,354

65.3%

-16.7%

$1,847

18.8%

13.7%

Columbus, Ohio

$295,211

16.7%

$1,852

40.3%

-13.8%

$1,440

12.3%

9.1%

Indianapolis, Indiana

$266,890

20.3%

$1,520

47.6%

-11.5%

$1,501

13.2%

10.8%

San Jose, California

$1,706,565

22.4%

$8,664

54.4%

-20.8%

$3,295

12.1%

8.1%

Austin, TX

$599,525

32.4%

$3,724

59.4%

-28.9%

$1,869

18.7%

9.6%

Virginia
Beach, Virginia

$321,842

14.1%

$1,774

41.0%

-2.9%

$1,607

11.0%

7.7%

Nashville, TN

$442,418

33.1%

$2,400

65.2%

-30.2%

$1,840

18.4%

12.5%

Providence, RI

$444,314

16.3%

$2,637

41.3%

-27.3%

$1,946

15.3%

8.3%

Milwaukee, Wis.

$271,326

11.8%

$1,695

34.4%

-19.6%

$1,186

7.5%

8.3%

Jacksonville, Florida

$363,998

33.1%

$2,099

62.8%

-25.7%

$1,778

19.2%

12.4%

Memphis, TN

$228,061

20.6%

$1,375

46.1%

4.8%

$1,536

12.6%

9.5%

Oklahoma
City, okay

$213,799

18.3%

$1,308

42.8%

-20.1%

$1,335

11.9%

10.6%

Louisville, Kentucky

$238,698

13.8%

$1,356

39.6%

-18.6%

$1,279

11.4%

13.0%

Hartford, Connecticut

$318,367

14.4%

$2,055

36.7%

-31.2%

$1,628

11.1%

8.3%

Richmond, Virginia

$326,990

13.2%

$1,759

40.7%

-22.2%

$1,591

12.8%

6.8%

New
Orleans, LA

$266,858

14.3%

$1,552

39.5%

-16.0%

$1,522

16.0%

16.0%

Buffalo, NY

$246,213

17.7%

$1,657

39.5%

-10.4%

$1,260

10.0%

8.2%

Raleigh, North Carolina

$456,241

37.3%

$2,494

69.9%

-28.0%

$1,742

16.9%

9.3%

Birmingham, AL

$237,845

17.8%

$1,271

46.6%

6.0%

$1,343

11.0%

10.8%

salt lake
City, UT

$612,118

27.4%

$3,183

59.7%

-38.4%

$1,712

17.3%

15.5%


*Table classified by market size

** Includes principal, interest, taxes and insurance, assuming a 30-year fixed rate mortgage with a 20% down payment and an interest rate of 5.23% on a home priced at the Zillow Home Value Index, or typical home value, for that area in May.


1 The Zillow Real Estate Market Report is a monthly overview of national and local real estate markets. Reports are compiled by Zillow Research. For more information, visit www.zillow.com/research.
2 Based on data from Freddie Mac
3 Assuming a new loan on a home priced at the Zillow Home Value Index in May of $349,816using a 20% down payment and a 30 year fixed rate mortgage at 5.78% including taxes and insurance.
4 Assuming a new loan on a home priced at the Zillow Home Value Index in April of $344,773using a 20% down payment and a 30-year fixed rate mortgage at 4.98%, including taxes and insurance

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SOURCEZillow

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