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One Pretty Absurd Graph of Scary-High Home Prices
Two years ago, we were all forced indoors for an indeterminate amount of time.
One year ago, people realized they needed more space and started buying homes at a feverish pace.
This year, average home sales prices eclipsed $500,000 for the first time ever. Couple that with rising interest rates, and you have what appears to be an untenable position for the housing market.
For fun, let’s look at what it would take for the typical American to buy a house right now. Assuming averages across the board, here are our assumptions:
- House price: $507,800 — the average according to the Fed at the end of Q1
- Down payment: $66,014 — based on the median down payment of 13%
- Mortgage: $441,786 — which we will assume is a 30-year fixed
- Interest rate: 5.81% — the weekly average according to Freddie Mac
And the financial toll excluding taxes, fees, insurance, maintenance, and so on:
- Monthly payment: $2,595
- Monthly gross income: $4,120
That’s 63% of the typical individual’s GROSS income. Yikes
This was initially published via the DD newsletter. Continue reading here.
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