Overall, RealtyTrac says the cost of homeownership rose 21 percent year-to-year in the 325 U.S. counties included in the analysis.
Most of the increase comes from higher home values and higher mortgage interest rates – an average 10 percent rise in median prices combined with a 33 percent increase in the average interest rate for a 30-year fixed rate mortgage as reported by Freddie Mac.
“A potent combination of rapidly rising home prices and the often-overlooked but significant uptick in interest rates in the second half of 2013 caused the monthly cost of owning a home using traditional financing to jump substantially in many markets over the last year,” says Daren Blomquist, vice president at RealtyTrac.
“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,” Blomquist adds.
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 – set by the U.S. Department of Housing and Urban Development for 2014 – in 91 percent of the counties analyzed (296 out of 325).
Among the 15 most populated counties analyzed, the estimated monthly house payment increased an average of 34 percent from a year ago, making the house payments higher than the average fair market rent for a three-bedroom home in six of those 15 largest counties.
Read more at Florida Realtors®
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