Real Estate & Housing Affordability Slipping Out Of Reach

July 30, 2018



The housing affordability in the U.S. is measured by the amount of the average monthly mortgage payment. During the first quarter (January, February and March) of 2018, there was an increase of 5% in the monthly mortgage payments. Analysts are predicting the average will rise another 10% to 15 % by the end of this year.


These statistics are based on a national average and not the local average. Many local markets, such as Colorado are predicted to have higher numbers of affordability reaching 20% or more by the end of the year.


Along with the rising prices of houses, the mortgage interest rates are also inching upward. The mortgage rates have been rising from 4% to 5% on a 30-year fixed mortgage. One last element factored into the housing affordability is the home prices are rising much faster than the median income. In other words, income is not keeping up with this upward swing of home prices.  


Because the U.S. is in the middle of a strong economic surge and there is a shortage of housing inventory, there is no expectation that housing prices will see any kind of a drop for buyers in the near future.


Now ten years past the Great Recession when the price of houses dropped astronomically, we are near an historical peak in housing prices. Combined with a record low of housing inventory, the real estate is more than red hot.


Home sellers are seeing multiple offers come in. Buyers are stretching their budgets and pushing the limit as to what they can afford and increasing the amount of their offers to buy. During the last 6 months of 2017, the real estate market was seeing a dramatic uptake where more than 45% of the buyer’s gross monthly income went toward the mortgage payment. For this reason, Fannie Mae had their debt-to-income threshold raised to 50% for prospective buyers.   The long-term issue with over-extending oneself is there is less money left over to spend for other items and can affect the overall economy in the next several years.


Economists do see some of the overvalued market areas that are now typically in the large metropolitan areas such as Denver, cooling somewhat in the next year followed by a slowdown in late 2019. They also believe a slight easing in the overall market next year. On the other hand, cities such as Los Angeles have a crisis on their hands where over 600,000 people are “severely rent burdened” spending more than half their income on rent/mortgage payments and where more than 8,000 people became homeless for the first time.


But for now, it’s expected the housing market will become even more competitive even with the rising prices. Some sellers are seeing offers to buy their homes - sight unseen and no inspections.


If you need a real estate attorney for your housing or real estate legal issues, call the Denver, Colorado real estate lawyers at 303-618-2122, or visit


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