As Mortgage Payments Double, Builder Sentiment Buckles
Would-be US homeowners have seen their buying power "significantly eroded" over the past two months.
The quote is from NAHB Chairman Alicia Huey, but you needn't be any sort of industry expert (nor consult anyone who is) to come to that conclusion. You could just look at mortgage rates. Or, better yet, pick out a nice house, then do the math on the monthly payments.
As it turns out, that math suggests it's never been more expensive to pay for a wooden box on a 30-year installment plan. Those p
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.