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Priced Out: Where Higher Rates Could Hurt Home Buyers Most

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

Photograph by Giovanni Simeone/SIME/eStock

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Pain at 5%: San Diego

Monthly income devoted to mortgage bill:

• historic average: 31.3%

• at 5% interest rate: 38.9%

San Diego is another market where buyers may already be priced out. Extremely tight inventory, combined with steady demand from a strong military presence here, means homes are increasingly out of reach. The historic average for mortgage payments is 31.3 percent of monthly income; the percentage paid in 2013’s third quarter was 33. Mortgage rates at 5 percent will bump that up to just below 39 percent, and at 6 percent it will take 43.5 percent of monthly income to pay the bill. Zillow expects the median home value to rise 8.4 percent by September, to $470,052. The median income is $62,229.

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