average PITI payment is up 93% since Q2 2020

[clarkfan1979]

According to the Money Guy Show, they provide median house price and interest rates and conclude that the median PITI mortgage payment went from $1350/month in Q2 2020 to $2600/month in Q1 2022.

The example starts at the 2:00 mark.

During this same time "mortgage payment to income ratio" went from 20% to 34%. That example is at 4:30.

https://www.youtube.com/watch?v=qqK6NPJhtR8

[uniwelder]

On a related note, I was just listening to NPR's The Indicator podcast.  This one was called The Housing Shakeup and an analyst looked at housing affordability for 2022 so far.  In January, 50 million people (households) would have been qualified to buy a 400k house.  Due to increasing interest rates, by May, that number went down to 38 million.  Updated for Friday's interest rate hike, it goes down to 32 million currently.

edited to add--- from the Money Guy show, I like the visual provided by the graph of % income toward mortgage over the last 22 years.  From somewhere in the 20% range in the last 10 years, and then suddenly jumping to 35% now. 

edited to add again--- I just read through the last bit of the WTF is going with interest rates right now thread, which Waltworks sent a link for a study that covered about the same thing.  Incredible difference in affordability over the past 12 months (from mid May I think).

[PDXTabs]

On a related note, I was just listening to NPR's The Indicator podcast.  This one was called The Housing Shakeup and an analyst looked at housing affordability for 2022 so far.  In January, 50 million people (households) would have been qualified to buy a 400k house.  Due to increasing interest rates, by May, that number went down to 38 million.  Updated for Friday's interest rate hike, it goes down to 32 million currently.

Thank you for turning me on to this podcast. It's great!

[ChpBstrd]

And yet nobody seems to believe it is possible for housing prices to go down.

News: Housing prices can go down. They can stay down for a very long time too!

[BC_Goldman]

I'm hoping to see housing prices drop. We looked at a house a few weeks ago just out of curiosity. It was a flip that was purchased for $150k and listed for $300k. I didn't think they did a very good job. You could smell the must as soon as you walked in and I saw signs of mold in the basement starting to get through the paint they slapped on it.

Near as I could tell, they had replaced windows, did some work in the kitchen, put in faux wood laminate flooring, slapped up a sloppy paint job, and literally punched a hole in some drywall and cut a hole in the ductwork behind it to add a vent in one room.

The accepted offer on the house ended up being $325k! I had to wonder if the buyer actually looked at the house or just didn't know what they should be looking for.

[Jon Bon]

According to the Money Guy Show, they provide median house price and interest rates and conclude that the median PITI mortgage payment went from $1350/month in Q2 2020 to $2600/month in Q1 2022.

The example starts at the 2:00 mark.

During this same time "mortgage payment to income ratio" went from 20% to 34%. That example is at 4:30.

https://www.youtube.com/watch?v=qqK6NPJhtR8

Well yeah, when you cherry pick data like that is pretty easy to make bold statements. That's like saying the average payment went down a bunch from 2007 to 2010.

Houses got 20-50% more expensive due to the pandemic (cabin) fever, now we have interest rates being 2x what they were and it has not driven down prices (yet). So yeah pmts are going to be a lot more.

What that means long term, well I left my crystal ball in my other pants.

[clarkfan1979]

And yet nobody seems to believe it is possible for housing prices to go down.

News: Housing prices can go down. They can stay down for a very long time too!

Yes, housing prices will go down, eventually. However, if you wait 2,5,10 years for that to happen, it's not really a win.

Person A: Buys the 320K house in Q2 2020. Their 256K mortgage is 2.94% with $444 going toward principle and $1350/month total PITI.

Person B: Waits for prices to drop and rents a similar house for $2,000/month. Rent goes up 5%/year. Price of houses go up 16%/year for two years and peak at $430K. Then prices decline 10%/year for three years. They time it perfectly at the bottom and buy a house for 313K. Their 250K mortgage is 6% with $249/month going toward principle and a $1875/month total PITI.

Person A has a low rate fixed mortgage. After year 1, they start to put an extra $200/month into a brokerage account and it increases each year by $100/month. It's currently $500/month in 2025.   

Person B wasn't able to put any money into a brokerage account due to the 5% increases in rent from $2,000 to 2,100 to $2,205 to $2315 to $2431 to $2552.

In this example Person B waits 5 years to buy a house at the absolute bottom. They time it perfectly, but Person A still does better, in my opinion.