Anyone shopping for a home today has probably had at least one encounter with sticker shock.
No matter the neighborhood, home prices are generally rising, and bidding wars are often the rule rather than the exception. That means fewer neighborhoods are now considered affordable — a lot fewer.
Nine percent of the 456 U.S. counties measured by RealtyTrac, a real estate listing website, are not affordable, when compared to historically normal levels of housing affordability. That is up from just 2 percent one year ago.
It measured affordability based on the share of wages needed to make monthly payments on a median-priced home with a 30-year, fixed-rate mortgage, including a 3 percent down payment, property taxes and insurance. At the peak of the housing bubble in 2006, 99 percent of those counties were considered affordable, but mortgage standards, rates and down payments were far different back then.
"Home prices are floating out of reach for average wage earners in a growing number of U.S. housing markets," said Daren Blomquist, senior vice president at RealtyTrac. "The recent drop in interest rates has helped to soften the blow of high-flying price appreciation in some markets, but the affordability equation could change quickly if interest rates trend higher and home prices continue to rise faster than wages."