IT’S $500 more, each and every month. That’s the additional cost of a mortgage payment if you bought a median-priced home in San Jose, California, in the first quarter of 2018 compared to late last year. The mortgage payment would be about $4,600 compared to $4,100 due to higher lending rates and increasing home prices.
Bloomberg calculated the monthly aggregate housing cost, for both new buyers and renters, by weighting each region’s share of housing units that were occupied by owners and renters, respectively.
The financial burden of living in coastal neighborhoods reveals itself quickly in the Bloomberg study. San Francisco, Seattle, Portland, Jacksonville, and the Bridgeport-Stamford-Norwalk, Connecticut area rounded out the top five areas with the fastest increase in mortgage payments. Altogether, new buyers in almost one-third of metropolitan housing markets faced higher mortgage costs of $50 or more per month in the first quarter.
Rental costs weren’t any better. Slightly over 10% of all metro areas saw rents rising faster than inflation. In three locations, rents increased by more than 5%.
Overall, eight of the top 20 most expensive markets are in California, with three of them among the 100 largest metro areas in the US. San Jose, San Francisco, and Los Angeles are the three priciest markets.
Among the largest 100 markets, for a typical house hunter, only Albany, New York, saw a decrease in the average mortgage payment in the first quarter. Average monthly obligations in Albany fell $27 to $760. But, the drop is a reflection of the 7.6% fall in median home prices in the region compared to a one quarter earlier.
“By many metrics, the US housing market in 2018 is on sound footing,” said Chris Herbert, managing director of the Harvard Joint Center for Housing Studies, but “in many respects the situation has worsened for both the lowest-income Americans and those higher up the income ladder.”
The increases in home prices and rents means that in the first three months of 2018, in more than one fifth of metropolitan areas, housing expenses drain more than 30% of income, a widely accepted metric for home affordability.
In nine metro regions, aggregate housing costs breached 50% of income. Eight of them are located in California and the ninth is Honolulu. High incomes in San Francisco, the second-most-expensive market in the Bloomberg study, kept that area from crossing this threshold, however, its residents spend 46.6% of income on housing. — Bloomberg