Interest rates outpacing values for impact on costs
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The impact of rising mortgage rates is highlighted in a new report on the monthly cost of homeownership.
The analysis by Zillow finds that higher rates are responsible for about two-thirds of the increase in buyers' monthly mortgage payments compared with what those costs would have been a year ago had home values remained constant at their current level.
Compared with August 2017, buyers of the typical US home are paying 15.4% more in monthly mortgage costs while the median home value has risen 6.5% in that time.
The additional cost of home prices and mortgage rates means an extra $118 per month or $1,416 per year.
"For most of the current economic expansion, mortgage rates have remained just off historic lows even as the American economy has accelerated," said Zillow Senior Economist Aaron Terrazas. "We're finally starting to see typical patterns asserting themselves in the housing market, and conditions are returning to more of what we would expect in a normal economy.”
Terrazas added that the market has become used to low rates and the change will take some adjustment such as a slowing of home value growth, especially in higher-priced markets; and higher borrowing costs.
Where the costs have soared most
In San Jose, CA, buyers will carry the largest additional burden of rising rates and home prices.
The extra monthly cost of $1,300 means an additional $15,500 every year.
|
Metropolitan Area |
Median |
Annual Change |
Annual Change in |
|
United States |
$ 216,700 |
6.5% |
15.4% |
|
New York-Newark-Jersey City, NY |
$ 426,300 |
4.4% |
13.1% |
|
Los Angeles-Long Beach-Anaheim, CA |
$ 641,800 |
5.2% |
13.9% |
|
Chicago-Naperville-Elgin, IL |
$ 219,100 |
4.2% |
12.9% |
|
Dallas-Fort Worth-Arlington, TX |
$ 229,400 |
9.7% |
18.8% |
|
Philadelphia-Camden-Wilmington, PA |
$ 227,200 |
4.2% |
12.9% |
|
Houston-The Woodlands-Sugar Land, TX |
$ 198,500 |
5.3% |
14.1% |
|
Washington-Arlington-Alexandria, VA |
$ 397,800 |
3.2% |
11.8% |
|
Miami-Fort Lauderdale-West Palm Beach, FL |
$ 274,000 |
7.0% |
15.9% |
|
Atlanta-Sandy Springs-Roswell, GA |
$ 204,600 |
10.4% |
19.6% |
|
Boston-Cambridge-Newton, MA |
$ 451,500 |
5.2% |
14.0% |
|
San Francisco-Oakland-Hayward, CA |
$ 947,700 |
9.0% |
18.0% |
|
Detroit-Warren-Dearborn, MI |
$ 153,900 |
7.4% |
16.3% |
|
Riverside-San Bernardino-Ontario, CA |
$ 356,600 |
5.5% |
14.3% |
|
Phoenix-Mesa-Scottsdale, AZ |
$ 254,400 |
6.3% |
15.2% |
|
Seattle-Tacoma-Bellevue, WA |
$ 486,800 |
8.2% |
17.1% |
|
Minneapolis-St. Paul-Bloomington, MN |
$ 258,900 |
5.4% |
14.2% |
|
San Diego-Carlsbad, CA |
$ 580,500 |
4.9% |
13.6% |
|
St. Louis, MO |
$ 161,200 |
4.6% |
13.3% |
|
Tampa-St. Petersburg-Clearwater, FL |
$ 205,000 |
8.9% |
17.9% |
|
Baltimore-Columbia-Towson, MD |
$ 263,300 |
3.9% |
12.5% |
|
Denver-Aurora-Lakewood, CO |
$ 396,200 |
6.2% |
15.0% |
|
Pittsburgh, PA |
$ 140,200 |
6.1% |
15.0% |
|
Portland-Vancouver-Hillsboro, OR |
$ 387,900 |
4.2% |
12.9% |
|
Charlotte-Concord-Gastonia, NC |
$ 195,000 |
8.8% |
17.8% |
|
Sacramento--Roseville--Arden-Arcade, CA |
$ 397,100 |
4.3% |
13.0% |
|
San Antonio-New Braunfels, TX |
$ 184,600 |
4.4% |
13.1% |
|
Orlando-Kissimmee-Sanford, FL |
$ 226,300 |
7.9% |
16.9% |
|
Cincinnati, OH |
$ 161,000 |
5.4% |
14.1% |
|
Cleveland-Elyria, OH |
$ 140,400 |
5.2% |
14.0% |
|
Kansas City, MO |
$ 181,300 |
7.5% |
16.5% |
|
Las Vegas-Henderson-Paradise, NV |
$ 263,300 |
12.0% |
21.3% |
|
Columbus, OH |
$ 180,700 |
6.5% |
15.3% |
|
Indianapolis-Carmel-Anderson, IN |
$ 152,700 |
8.1% |
17.1% |
|
San Jose-Sunnyvale-Santa Clara, CA |
$ 1,281,100 |
22.7% |
32.9% |
|
Austin-Round Rock, TX |
$ 296,300 |
5.3% |
14.1% |
