U.S. housing affordability poised to fall to lowest since 2007 Great Financial Crisis on soaring prices, rates

As home prices hover near historical highs and mortgage rates keep soaring, housing affordability in the U.S. is about to reach its lowest point since the 2007 Great Financial Crisis, according to a report by S&P Global Ratings released on July 20.

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Assuming a down payment of 10%, first-time homebuyers will have to pay 28% of their income to cover mortgage payments by the end of 2022 – the highest level since Q1 2007, S&P Global noted, adding that mortgage payments as a percentage of a household’s income shouldn’t surpass 25%, noting the National Association of Realtors’ (“NAR”) guidelines.

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As a testament to how much mortgage rates have risen since the onset of the pandemic, the 30-year fixed-rate mortgage averaged 2.66% in the week ended December 24, 2020 vs. an average of 5.54% in the week ended July 21, 2022.

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https://seekingalpha.com/news/3859754-us-housing-affordability-poised-to-fall-to-lowest-since-gfc-on-soaring-prices-rates