A new report from Realtor.com reveals that the housing crisis is deepening as 47 major metro areas now require homebuyers to spend more than 30% of their income on a mortgage. The 30% rule, which aims to keep yearly home costs at or below 30% of monthly income, is becoming increasingly challenging in many US cities.
Only three major metropolitan areas – Pittsburgh, Pennsylvania; Detroit-Warren-Dearborn, Michigan; and St. Louis, Missouri – meet the affordability standard, where households can afford a median-priced home without exceeding 30% of their yearly earnings. In these cities, households would need to pay around $19,970 per year for mortgage, tax, and insurance on a median-priced home.
Realtor.com Chief Economist Danielle Hale warns that adhering to affordability guidelines is becoming difficult due to rising homebuying costs outpacing income growth. “Earnings have risen, but homebuying costs have risen faster,” she said. “It remains out of financial reach without significant changes to either housing supply or interest rates” in most large markets.
The report also highlights the need for more affordable homes, with some cities seeing median-priced homes requiring over 60% of a household’s income. The National Association of Realtors and Realtor.com found that nearly half of the US’s largest metro areas are “stuck in the middle,” with misaligned housing supply and demand.
Source: https://www.foxbusiness.com/real-estate/housing-crisis-deepens-47-major-metro-areas-now-require-homebuyers-spend-more-than-30-income