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Priced Out: Where Higher Rates Could Hurt Home Buyers Most

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

Photograph by Chip Chipman/Bloomberg

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Pain at 5%: San Francisco

Monthly income devoted to mortgage bill:

• historic average: 38.2%

• at 5% interest rate: 46.4%

Homes in San Francisco have never been as expensive as they are now. The booming start-up scene and tight inventory have pushed prices beyond their pre-crash peak. The median home value as of last September was $630,700, and Zillow projects it will rise 8.1 percent by this September. The median income, meanwhile, is $75,732. From 1985 to 1999, it took an average of 38.2 percent of monthly income to cover the mortgage bill. If mortgage rates reach 5 percent, it will take 46.4 percent of monthly income, and almost 52 percent if rates hit 6 percent.