Rising home prices are forcing Americans to take on more debt in order to buy a home.
Realtor.com looked at the debt-to-income ratios for homeowners who have taken out mortgages in 2018 in the country’s 200 largest metros. Honolulu topped it’s list of most debt-strained cities, with a debt-to-income ratio of 45.1 percent. The median list price for a home in Honolulu is $692,600, while the median household income sits at just $81,300.
Following Honolulu were Riverside, Calif., with a ratio of 43.4 percent and Cape Coral and Lakeland, Fla. and El Paso, Texas, with ratios of 43 percent each. The metros with the least amount of debt were Huntsville, Ala., with a ratio of 33.6 percent, Ann Arbor, Mich., with a ratio of 33.7 percent, and Fayetteville, Ark., with a ratio of 34.2 percent.
“Escalating rises in real estate prices are causing more consumers to be stretched,” says Eric Tyson, co-author of “Mortgages for Dummies,” who points out that debt-to-income ratios are rising, but have not quite hit the levels we saw during the housing bubble. “In the years ahead, we could reach the point where it really puts a lid on future price appreciation.”