Where mortgage payments are least affordable

Dive Brief:

Median for-sale home prices are higher than median home values in 32 of the nation's 35-largest metros, according to Zillow.
Nationwide, median-income buyers of median-priced homes spend 20% of their earnings on monthly mortgage payments.
The Midwest and Rust Belt had the greatest affordability in Q1, with monthly mortgage payments in Cleveland (12.7%), Detroit (14.2%) and Pittsburgh (12.9%) requiring a smaller share of income relative to the national average (20%). Buyers in Los Angeles (46.8%), San Francisco (40.2%) and San Diego (39.6%) spent a significantly larger share of income on monthly mortgage payments during the period.

Dive Insight:

Home prices continue to rise, discouraging some buyers from entering the market. According to CoreLogic, home prices rose 1.6% from March to April and are up 6.9% year-over-year. With prices now ahead of their pre-recession peak, affordability concerns are only deepening.

Such growth has some would-be sellers concerned about listing their home in the event it sells faster than they can find a new one. The growth also challenges sellers to accurately set a price.

The uncertainty is having a measurable impact on buyers and sellers. According to the latest Fannie Mae Home Purchase Sentiment Index, the net share of Americans who think now is a good time to purchase a home fell 8 percentage points to a survey low of 27% in May. The share of Americans who say it’s a good time to sell rose 6 percentage points to 32%, a survey high, during the month.

An April Gallup poll found than 61% of U.S. adults expect home prices in their market to continue to increase in the next 12 months. That’s up from 55% who said the same a year ago and is the most since 2005’s 70%.

Amid a nationwide trend in home-price growth, cities in the Rust Belt and Great Lakes regions will continue to attract young homebuyers with relatively low housing costs, strong employment opportunities and renewed investment in area culture. A report earlier this year from the Urban Land Institute also recommends cities in this region undertake targeted efforts to welcome and integrate immigrants and to invest in workforce development to help the area’s new manufacturing economy prosper.