Home Affordability is Up, but On its Way Down
Black Knight Financial Services took a close look at trends in home affordability and the recent surge in cash-out refinances, as it applies up through the end of December. According to the data they gathered, there have now been a total of forty-three consecutive months of annual appreciation in home prices. Further, through the use of national medians of home prices and household incomes, they found that the ratios of mortgage payment-to-income remain favorable, according to historic standards.
When the group looked at the median principal and interest payments for October of the last fifteen years, they observed that such payments consumed fully 26% of a median household’s income in 2000, rising to a peak of 33% in 2006, and then falling all the way down to 18% in 2012. In October of 2015, this figure was at 21%, below the median of 26% for the past fifteen years and within the realm of reasonable affordability.
Unfortunately, the trend seems to be upward. The group is projecting that median principal and interest payments will reach 24% of median income in 2016, and surpass the median in 2017
