Source: The Ascent —
It’s been a wild couple of years for the housing market, from price increases due to a lack of housing supply and skyrocketing demand, to this year’s mortgage rate spike. New data from the Dallas Fed suggests that we could be facing a housing bust, bringing with it a home price correction of 15%-20%. And indeed, there are already signs the housing market is beginning to soften.
If you’re a wannabe home buyer, this might sound like great news, especially in light of the ridiculous prices we’ve seen. Recent data from Redfin showed that potential buyers need an income of $107,281 to afford a mortgage payment of $2,682 (the monthly payment for a typical American home these days). This is due to the combination of prices and mortgage rates being up. While we may end up with a price drop across the board, interest rates are a force to be reckoned with.
Higher mortgage rates = less affordable homes
What kind of impact does your mortgage rate have on your housing payments? Let’s take a look based on data from 2021 and 2022.