For The First Time Since 2008, It Costs Over $1000/Month To Purchase A Median U.S. Home

Tyler Durden's picture

Two months ago, with interest rates spiking higher on fears about Trump's fiscal stimulus, we showed a troubling chart in the October Black Knight Mortgage Monitor report. According to the housing consultancy, as a result of the effect jump in mortgage rates, the population of borrowers who could both likely qualify for and have interest rate incentive to refinance had been cut in half in just one month: "Mortgage rates have jumped 49 BPS in the 3 weeks following the election, cutting the population of refinanceable borrowers from 8.3 million immediately prior to the election to a total of just 4 million, matching a 24-month low set back in July 2015."

Fast forward to today, when Black Knight released its latest, December, Mortgage Monitor, which reveals another concerning observation, namely that with the recent rise in interest rates, housing is now the  least affordable it’s been since 2010

According to the report, at the prevailing 30-year conforming mortgage rate (4.19% as of January 26th), it now requires 22.2% of the median income to make the monthly principal and interest (P&I) payment on the median priced home. Prior to this, the highest post-bubble ratio was 21.4% in 2013, before home prices began to decelerate and interest rates to pull back down.

In total, there was a 10 percent increase in the monthly P&I payment required to purchase the median home in Q4 2016 alone.

Worse, the monthly P&I payment on the median home (using a 30-year fixed loan with 20 percent down) was $1,045 in December, the first time it had crossed the $1000 barrier since 2008.

Which is a double whammy of bad news not only for home buyers, most of whom will be increasingly strapped for cash for other, discretionary purchases, but also for the banks, whose refi pipeline - a steady source of income and easy profit - is set to bet cut in half, the first trace of which we observed in the recent Wells Fargo results.

It is also bad news for the overall economy, which is desperate for the long overdue housing-led recovery which never managed to materialize during the Obama administration.

Source

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Life of Illusion's picture

FED BUY MOOOOOR MBS

DOES NOT GET REAL UNTIL FED STOPS

https://www.newyorkfed.org/markets/ambs/index.html

balolalo's picture

i am confused..... is this WINNING?

divingengineer's picture

Our friends are talking about 40 year mortgages now in the bay area. My wife and I are both professionals, we're looking around at houses, there is literally nothing that we can buy for three years salary and 20% down.
Not even a fixer-upper.

hoist the bs flag's picture

"bay area"?  meaning CA? if so wtf are you doing there. get out while you still can.

Chris Dakota's picture
Chris Dakota (not verified) hoist the bs flag Feb 6, 2017 2:40 PM

jobs

hoist the bs flag's picture

understandable...but when it splits off into the ocean, the fed rate and gangs and mexico and...aw never mind. ;)

Countrybunkererd's picture

they say some people will do anything for money.  You could live a better life driving a tractor trailer and living ANYWHERE you wanted, so what if you have a degree or three for that matter?  Hell you could live a better life living IN your tractor trailer!

Nobody For President's picture

Your basic point of a blue collar job is OK, but choosing long-haul trucking as a career these days is pretty dumb - it's going automatic with a vengencel the next ten years.

Try electrician or plumber - electrician is cleaner, but both are useful work that pays well, and you can make a living in a small town with it to boot.

Countrybunkererd's picture

large fleets might lay out the cash but the smaller ones won't.  how does a company deal with a breakdown and nobody to oversee it...fly a non existent staff out to take care of it?  Call an unknown shop to tow the 300K+ truck with no oversight?  But yes, i do see your point.  I wonder how in the hell they will get a 53' trailer around areas that even really good drivers have issues?

steve2241's picture

Job-itis, a malady of the worst kind.

Takeaction2's picture
Takeaction2 (not verified) hoist the bs flag Feb 6, 2017 4:00 PM

It is so funny when people say "Get Out"  and move where...to Mississippi, Arkansas, Kentucky, Tennessee...where the average wage is $35K to $59K a year...No thanks.  I have traveled this country...was just in Ohio...No thanks.  Then I was just in Oklahoma...No Thanks.   I will stick to the West Coast or East Coast......make big money and deal with it.  And in Oregon...you are 80 minutes from the Beach...70 Minutes to The best Skiing in the world.  City life, country life.  And it is green.  Yes we have our problems...especially being so liberal.  But there's a reason the West Coast and the East coast cost so much.  THIS IS WHERE THE MONEY IS BITCHEZ!!

Countrybunkererd's picture

Then don't F**ing cry about prices.

hoist the bs flag's picture

you got down voted because you are part of the problem

Chris Dakota's picture
Chris Dakota (not verified) divingengineer Feb 6, 2017 2:30 PM

Look in the East Bay it's cheaper.

Even Pittsburg, lots of white people moving there up in the hills that face Concord.

Chuck Walla's picture

Pittsburg and Benicia, Vallejo used to be pretty downscale. Judging from the recent traffic congestion, I'd say people have long discovered the area on the Carquinez Strait and its fast rising, too. What a feckin long commute to the city.

Chris Dakota's picture
Chris Dakota (not verified) Chuck Walla Feb 6, 2017 2:42 PM

Don't go to Vallejo. I bought a cool Victorian house there in 2010 restored it and moved the hell out.

It's crazy, dangerous, the cops were having a war with the citizens. Sold it for less than I paid, plus gave them money to help with closing costs FHA.

It is dangerous and depressing

D-plorable's picture

My dad lives there, funny how there's tons of new houses, but no stores within at least 1 mile, making a walk to the store improbable.

Agstacker's picture

I wonder what the property taxes are on those places...

dojufitz's picture

Come to Melbourne Australia and stare at the prices for homes.....people will think you have Parkinson's as your head will never stop shaking....

Philo Beddoe's picture

This is why I read the comments at ZH. LOL. 

new game's picture

prices will fall. the buyer buys a payment and gets a home...

markets will allow for settling for less, like for a flat, shared walls, floor and ceiling.

now that's what i want, listening to the neighbors moan and groan...

Chris Dakota's picture
Chris Dakota (not verified) dojufitz Feb 6, 2017 2:37 PM

Never should have let the Chinese in.

SteveNYC's picture

$1,000 + / month plus taxes plus maintenance plus improvements plus plus plus plus......

 

SomethingSomethingDarkSide's picture

Plus payments for homes of those that can't afford a home and aren't even US Citizens i.e. NY City, Boston, LA, San Fran, Seattle, etc.

Agstacker's picture

Brought you you by 84 lumber.

brooklinite8's picture

Insurance... Lol. I live in a co op and they have made us to have home owners insurance mandatory. They want me to buy insurance for some one who comes to my apartment and gets hurt. I not only think this is crazy. I can see this getting twisted and say you need to buy insurance for all the people who live with in a 100 mile proximity .... Life is getting ludicrous.

new game's picture

i co op my property to guns and roses...

no soliciting allowed, see the skulls at the beginning of the driveway? first clue..

someone had the audasity to steal one, imagine that-lol.

mrdenis's picture

In New Jersey 1,000 a month ,that's just for property taxes ....

divingengineer's picture

Rented a house in Cherry Hill for a year once, for work. It may be even higher than that there.

gatorengineer's picture

Fucking retarded article the median home price in the US is 250K, You tell me where you can get principal interest, insurance and taxes for $1045 on that amount and I am there.  Answer is more like 1300.....  Only off 25%

Countrybunkererd's picture

as the bankers say, it's only a number (that doesn't show up on anything YOU see)... or Hitlery "what difference, at this point, does it make?"

HRH Feant's picture
HRH Feant (not verified) gatorengineer Feb 6, 2017 4:56 PM

I thought the same thing. My mortgage payment is exactly $1000 a month with a 2.875% fixed rate 30-year. But that only happened because I did a refi. I don't how the fuck anyone buying a home and getting a new mortgage is going to have a $1045 a month mortgage! Maybe they left of the TI part of PITI.

In Ze No's picture

I'm right behind you in upstate NY where we get very little in services for the $10k/ year taxes and those are cheap for my town.  Most of these are school taxes.  The teachers are great.  They really are wonderful.  But I'm not eating cat food in my retirement to fund their full vision, dental and insurance and pension rides.

Trying to talk DH into putting up home for sale soon. 

MaxMax's picture

I live in NJ in an OK little town in an OK house built in the 1950's, and spend over $1,500 a month in taxes.  In the same town, I once lived on a fancy street (was married at the time), and my neighbor a few doors down was paying over $1,000 per week in taxes.  That wasn't his mortgage, utility bill, landscaping, etc.  It took him *years* when he wanted to sell it.  He eventually did sell it but the selling price was far below his construction costs 15 years earlier.

timf008's picture

I can't even find a job that pays $1500 per month.

johnconnor's picture

Don't forget HOAs, yes I know is another Taxa but they are worst than cancer in Texas

TeethVillage88s's picture

Soo another thing to watch if a guy moves to Texas. No condos. I guess mobile houses pay the same kind of fee, but condo has to be better lifestyle.

divingengineer's picture

Residential single family home neighborhoods are doing a HOA fees now too.
Their excuses community landscaping. $250 a month seems a lot for landscaping. For that kind of money, they should be painting address numbers on the curbs fixing fences, all sorts of shit.

TeethVillage88s's picture

Jeez. There is a finance guy that now lives in Puerto Rico.

I would think it is about time to find an apartment or something in Asia, Caribbean, or Central-South-Latin America.

We just gone full retard.

I hear there are federal transportation dollars that can be spent by towns on the main roads to put in sidewalks, trees that will need maintenance, medium curbs or beautification. Transpo funding by the federal govt is intended sometimes like this to increase business revenue or traffic (from what I hear)

LyLo's picture

A couple goes around painting curb addresses for everyone in my neighborhood every few years (very nicely, I might add.)  They charge $5.  I always give them $20, because they seem really nice and I love the service.

Sorry, but a curb address ain't gonna cut it: for $250 a month, those fuckers better come fix my roof after a storm.

Agstacker's picture

I wonder if the president of the HOA is just pocketing that money.  Even an average subdivision of say 50 homes times $250 is $12,500 per month.  What the hell are they spending all that money on?

TeethVillage88s's picture

I got minimum of $6000 for mandatory telephone, insurance, property taxes, utilities, waste pickup, water, insurance on sewage and water lines.

So $1000 X 12 Months = 12000 + 6000 = $18,000 a year for cheap house with mortgage. No cost for yard clean up & A/C, Heating maintenance, service calls.

divingengineer's picture

In the bay area houses have about $1000 a month tax load. About $600,000 for a decent starter home. Don't come here unless your household makes $250-$300,000 a year.
That's just friendly advice.
I have no idea what people who make minimum-wage or even $25 an hour do. They must live 10 to a house or get section 8, or something.

GodSpeed_00's picture

Think US is bad try the rest of the world.

ejmoosa's picture

The US is not bad.  It's the urban areas where they have controlled the supply and jacked up the demand by making sure commutes are a living hell so you want to be closer to work,

This results in a higher tax base for the cities, who need every dollar that they can get their hands on.

ejmoosa's picture

I just checked my commute time for a job I used to have commuting 32 miles to work starting at 3 pm(late 80s).  

Back then the commute took 40 minutes.  Today the exact same commute would take 1 hour and 20 minutes.

I bet the same holds true for most of us. And it is not an accident or a lack of dollars for highways.  

It's by design.

Countrybunkererd's picture

my commute is exactly 30' (ok not exactly but about that +/- 25% - picked that % for gatorengineer) from my kitchen coffee pot to my office desk.  I am blessed.