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Priced Out: Where Higher Rates Could Hurt Home Buyers Most

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

Photograph by Ken James/Bloomberg

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Pain at 5%: Sacramento

Monthly income devoted to mortgage bill:

• historic average: 25.9%

• at 5% interest rate: 29.5%

An influx of large-scale investors has snapped up much of the housing stock here, making what housing remains increasingly unaffordable. Zillow expects the median value of homes in Sacramento to appreciate 16.7 percent by the end of the third quarter, to $331,195. That’s great for existing homeowners and those big investors, but not for wannabe buyers. If mortgage rates rise to 5 percent, potential owners face the prospect of forking over 29.5 percent of monthly income to cover the bill; at 6 percent, it will be 32.9 percent. The historic average is 25.9 percent. Median income is $57,879.