Priced Out: Where Higher Rates Could Hurt Home Buyers Most

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

Photograph by L. Todd Spencer//The Virginian-Pilot/AP Photo

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Pain at 6%: Virginia Beach, Va.

Monthly income devoted to mortgage bill:

• historic average: 18.1%

• at 6% interest rate: 21.8%

Tourism, retirees relocating to the area and a large military presence creates year-round demand for housing in this coastal community. That helps contribute to a growing affordability problem in a city where the median income is $52,113. The median home value, as of 2013’s third quarter, was $198,100, and Zillow forecasts that it will be just below that at the end of September. Mortgages at 5 percent lift the percent of monthly income needed for mortgage payments to 19.6 percent, above the historic average of 18.1 percent. At 6 percent, that rises to 21.8 percent.

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