Mortgage Affordability Metrics: A Brief Guide to an Important Equation
A key question that has emerged during the housing recovery concerns mortgage affordability. Despite slow but steady economic growth and a halving of the overall unemployment rate to under five percent, the ability for a typical family to afford purchasing a home remains a significant challenge.
In April 2016, a typical new home cost more than $321,000, and the typical existing home sold for more than $232,000, according to U.S. Department of Commerce and National Association of Realtors® data.
Additionally, Zillow data indicate that the minimum income required for a mortgage payment on a median-valued home in metropolitan areas across the United States rose from $49,752 in the first quarter of 2009 to $55,753 in the first quarter of 2016, an increase of about 12 percent, as shown in the accompanying chart.