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As Mortgage Payments Double, Builder Sentiment Buckles
Would-be US homeowners have seen their buying power "significantly eroded" over the past two months.
Take that 2630 and add in 150/mo for insurance and 500 (minimum) for taxes and you get a monthly payment of roughly $3300/mo. If a borrower wants to hold the payment to 30% of gross income, that will require and income of over $130k. Sounds about right. That’s on gross income, not net. If one is losing say 30% in deductions on that pay stub, then one will need right around $190k gross to make that $3300 monthly equal to 30% of one’s net pay. Ouch. No wonder there is sticker shock. If I had mortgaged my modest below average $450k house for 30 yr @ 7%, with my current taxes and insurance I’d be shoveling out $3665 a month. That’s obnoxious.
I bought an expensive home in 2023, not thrilled about it. Patiently awaiting the refinance.
Ah, rising insurance premiums. If an insurer can increase premiums +30% and keep risk exposure the same, that is a big increase in underwriting profitability. Higher yields are also boosting investment income. Yes, climate change is driving higher weather risk, but not at the rate of +30% a year, and you can lower coverage limits to hold exposure flat.