Rising Mortgage Payments Outpace Prices

As of September 2018, median home prices are up 5.6% year-over-year. The more relevant figure, though, may be mortgage payments. The “typical mortgage payment” is a measure adjusted for median home prices, so if people are paying similar percentages, the value shouldn’t change much even if prices increase. In reality, this measure is up 16.4% over the prior year, as a result of a 0.8% increase in mortgage rates.

Both of these values are expected to decrease for 2019, with an estimated 5% increase in median home prices and up to an 11.3% increase in typical mortgage payment. However, a gap this large is still an indicator of the effects of inflation. They represent an inflation-adjusted increase of 2.7% and 8.9% respectively. Fortunately, real disposable income is expected to increase 2.6% over the year. And with the mortgage rate having been 6.7% in 2006, we’re still a ways off from the all time peak typical mortgage payment of $1,281.


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