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Priced Out: Where Higher Rates Could Hurt Home Buyers Most

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

Photograph by Cat Vinton/Gallery Stock

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Pain at 5%: Riverside, Calif.

Monthly income devoted to mortgage bill:

• historic average: 23.2%

• at 5% interest rate: 29.9%

In Riverside, long seen as a more affordable alternative to Los Angeles, dramatic population growth and tight inventory have led to strong price gains. The percentage of monthly income needed to cover the mortgage bill in 2013's third quarter, at 21.3 percent, was below the historic average. A 5 percent mortgage will tip the scale into unaffordable territory, requiring almost 30 percent of monthly income; a 6 percent rate will eat up 33.4 percent. Zillow projects a 23.9 percent increase in the median home value by September, to $307,238. The median income here is $59,213.