There is no question that the spike in home prices and the more than doubling of mortgage rates has made it much harder to afford a house, even in a relatively low-priced market such as Buffalo Niagara.
In fact, the rise in mortgage rates made a big dent in affordability by adding hundreds of dollars to the average homebuyer’s monthly mortgage payment at a time when home prices were soaring by 90% over the past eight years, according to data from the Buffalo Niagara Association of Realtors.
Zillow estimates that the rise in mortgage rates from their low of around 3% to their peak of 7% reduced the purchasing power of home buyers in the Buffalo Niagara region by more than $97,000.
And that purchasing power hasn’t come back. Even when rates dipped to around 6% earlier this fall, the buying power of local home buyers increased by only $31,900, Zillow estimates.
That means new homeowners putting 20% down on a home with an average price of $257,000 need to use almost 28% of their monthly income to cover their mortgage payment, Zillow estimates.
That is better than the national average, where the typical homeowner spends 35% of their monthly income on their mortgage. And be glad you’re not living in San Jose, Calif., where the mortgage payment on an average-priced home sops up 70% of a resident’s average monthly income.
Source: The Buffalo News
