Home Costs Are Likely Taking Up the Highest Portion of Your Paycheck Since 2007

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Key Takeaways:

  • Typical homeownership costs now consume 35.1% of the average national wage, the highest level since 2007, according to real estate data firm ATTOM.
  • The average monthly costs for home mortgage, insurance, and taxes amount to $2,114.
  • The busy spring homebuying season typically reduces home affordability, but this trend is especially pronounced this year, according to ATTOM's CEO.


The Rising Burden of Homeownership Costs

In the second quarter of this year, homeownership costs accounted for the largest portion of wages since 2007. A report from real estate data provider ATTOM highlighted that major expenses on median-priced homes took up 35.1% of the average national wage. This figure exceeds prior quarters and surpasses common lending guidelines, signaling a significant financial strain for many homeowners.

Overall Monthly Costs:

  • Typical monthly homeownership expenses—including mortgage payments, homeowner insurance, mortgage insurance, and property taxes—total $2,114.

Factors Driving Higher Costs

Home Prices and Mortgage Rates: The surge in homeownership costs can be traced back to the pandemic, during which high demand drove up home prices. Post-pandemic, elevated mortgage rates have exacerbated the issue, making home loans more expensive and discouraging sellers from listing their properties.

Impact on the Housing Market

The direct consequence of these high costs is a significant drop in pending home sales, reaching lows not seen in over two decades.

Seasonal Trends: “It’s common for these trends to intensify during the Spring buying season when buyer demand increases. However, the trends this year are particularly challenging for house hunters,” said ATTOM CEO Rob Barber.

Conclusion

Homeownership costs are consuming a larger portion of the average paycheck than at any time since 2007, presenting considerable challenges for current and prospective homeowners. With home prices and mortgage rates remaining high, affordability is a pressing concern, especially during peak buying seasons.

Disclaimer: The information presented here is for general informational purposes only and is not intended to provide specific financial or investment advice. Always consult a professional financial advisor before making any significant financial decisions.

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