“Mansion Global” host Katrina Campins shares the latest in the real estate market on “The Bottom Line.”
Families with children are increasingly pushed out of their reach. US housing market Because both new mortgages and child support costs will rise.
A recent study released by Zillow found that potential homebuyers with children are likely to spend 66% of their income on: monthly mortgage payment Childcare increased significantly from around 50% in 2019.
The typical American family can expect to spend approximately $1,984 per month on child care and $1,973 per month on mortgage payments (based on a 6.6% interest rate). Median monthly household income hovers around $6,640, leaving only $2,683 available for other necessary expenses such as food, health care, insurance, transportation, retirement savings, and education.
Homes for sale in Cupertino, CA on February 7, 2024. (Photographer: Lauren Elliott/Bloomberg via Getty Images/Getty Images)
A general rule of thumb is that housing costs should be no more than 30% of your monthly income, but the Department of Health and Human Services recommends that families spend no more than 7% of their income on child care.
But in every market analyzed by Zillow, the typical household exceeds these guidelines, a trend that highlights just how out of reach the American dream has become for millions of families. I am.
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In fact, in 31 of the 50 largest metropolitan areas for which child care cost data is available, families looking to purchase a home can expect to spend 60% or more of their income on mortgages and child care costs. .
In some parts of the country, the cost burden is even worse. Parents in Los Angeles and San Diego will have to spend 121% and 113% of their income on childcare and mortgage payments, respectively. In both Boston and Seattle, the family must spend 92% of her.
September 13, 2023 in a classroom at Growing Tree Academy in New Glarus, Wisconsin. (Photo by Matthew Leduc for The Washington Post via Getty Images/Getty Images)
Housing affordability is at its worst in decades due to soaring home prices and mortgage rates. Together, the two would push the typical portion of the national average wage required for major homeownership costs to 33%.
There are several reasons for the affordability crisis.
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of federal reserve Thanks to an aggressive interest rate hike campaign, mortgage interest rates exceeded 8% last year for the first time in about 20 years. Interest rates have been slow to retreat, hovering around 7%, as higher-than-expected inflation data dashed investors’ hopes for an immediate rate cut.
Last week, the average interest rate on a 30-year fixed loan rose to 6.77%, well above the pandemic-era low of 3%, Freddie Mac reported.
Even though mortgage interest rates are nearly double what they were three years ago, home prices have remained largely unchanged. It is mainly There is a lack of available housing It is for sale. Sellers who had low mortgage rates before the pandemic began are reluctant to sell, leaving eager buyers with few options.
“This rapid rise in house prices, combined with mortgage rates that recently reached multi-decade highs, means many homebuyers will have to make trade-offs to cover necessary costs such as childcare. ” says the Zillow analysis.
