Magazine article Mortgage Banking

Monthly House Payments Increase 21 Percent from Year Ago

Magazine article Mortgage Banking

Monthly House Payments Increase 21 Percent from Year Ago

Article excerpt

On Feb. 20, RealtyTrac, Irvine, California, released a new report that found homebuyers saw their monthly payment rise by an average of 21 percent from a year ago in 325 counties in the United States.

The analysis found that the estimated monthly payment for a median-priced, three-bedroom home purchased in the fourth quarter of last year rose an average of 21 percent from one year ago in the counties studied.

Rising home prices and higher interest rates accounted for a good portion of the increase. An average 10 percent rise in median prices across 325 counties, combined with a 33 percent increase in the average interest rate for a 30-year fixed-rate mortgage (FRM), contributed to the monthly payment increase.

Still, even with the increase in monthly house payments, buying was less costly than renting for the average three-bedroom home in most markets. The company reported, "Despite the increase in costs to buy with financing, the analysis shows that the estimated monthly house payment for a median-priced, three-bedroom home in the fourth quarter of 2013 was lower than average fair-market rent for a three bedroom home ... in 91 percent of the counties analyzed (296 out of 325)."

But those 29 counties where the estimated house payments exceeded fair-market rents accounted for 20 percent of the population for the 325 counties studied.

The 29 counties included the California counties of Los Angeles, Orange, Santa Clara, Alameda, Ventura and San Francisco. Other counties included in the group were King County, Washington (Seattle); Suffolk and Westchester counties (New York); Will County (Illinois); and Denver County (Colorado).

Commenting on the findings, Daren Blomquist, vice president at RealtyTrac, said, "The monthly cost of owning a home is still less than renting in the majority of markets, but the cost of financed homeownership is becoming dangerously disconnected with still-stagnant median incomes, driven not by shoddy underwriting practices this time around but by investors and other cash buyers who are not tethered to the typical affordability constraints. …

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