First Quarter 2018 Saw Largest Mortgage Burden Increase for Buyers Since Great Recession

Mortgage payments are going up in the U.S. as home values continue to surge and mortgage rates have gone up more than 50 basis points since January 2018.

In the first quarter of this year, the share of income needed to make the typical monthly mortgage payment increased to 17.1 percent, almost as much as record high 17.5 percent in Q2 2009. Adding to these rising costs is sluggish wage growth. Last quarter, the median American home was worth 3.54 times the typical household income, Zillow reports. In nine out of the 35 largest housing markets in the country affordability is so tight that mortgage payments are now more financially burdensome than they were historically. In San Jose, Calif., mortgage payments for the median home are 51.2 percent, well above its historical average of 35.8 percent.

Renters continue to face greater affordability challenges than homebuyers, although the share of income they spend on housing has improved consistently – if marginally – over the past few years. The typical renter paid 28.8 percent of U.S. median income in the first quarter, up from a historical (1985-2000) share of 25.8 percent but down from a peak of 29.7 percent in the second quarter of 2015.

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