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      High Home Prices and Higher Rates

      High Home Prices and Higher Rates

      Published 10/24/2023 | Posted by Violet Leff

      Housing affordability or lack there of, has been a subject in the news for sometime now. I addressed that in earlier articles. However, while homes prices have generally decreased since last year, rising interest rates have caused prospective buyer demand to plummet. I wanted to show exactly what increased home prices and increased interest rates mean for home buyers in real dollar terms. Both from a monthly mortgage payment standpoint as well as income level needed.

      The first chart here is pretty “eye opening” for many prospective buyers. Since most buyers purchase based on what they believe they can afford to spend on housing each month, we look at a $3000/month PITI (principal, interest, taxes, insurance). For that monthly payment, what happens to the price of the home you can afford at each different interest rate? Then we see what income would be required to purchase a median priced home. Keep in mind the median price varies not only based on time but also city, zip and neighborhood.

      The second set of charts takes a deeper dive into the affordability levels in each of the 30 cities in the metro area. As you can see some are more affordable than others. If you want an even deeper dive you can check out the “insights” tab on my website, go to the affordability section and within that you’ll find the affordability charts for the 75 zip codes in the metro. As I’ve stated before, the affordability factor can change within the same city, and zip code when you look at specific neighborhoods within the zip.

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