Priced Out: Where Higher Rates Could Hurt Home Buyers Most

By Suzanne Woolley - 2014-01-09T16:47:41Z

Photograph by Ron Chapple/Corbis

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Pain at 6%: Visalia, Calif.

Monthly income devoted to mortgage bill:

• historic average: 20.6%

• at 6% interest rate: 23%

Home prices have been rising more than 20 percent year over year in the Visalia area. That's a prescription for unaffordability if the pace continues and mortgage rates also rise. At 5 percent, Visalia will still be affordable by historical standards, with 19.4 percent of monthly income needed to pay the mortgage. It’s the jump to 6 percent that's the rub, sending the percentage to 23. The median home value is expected to jump 16.4 percent by September, from $142,300 to $165,578. The median income is $41,470.