A brief excerpt:
Note: Black Knights data on affordability goes back to 1975.
And on the payment to income ratio:
• With 30-year rates hovering close to 6% and home prices up nearly 11% since the start of 2022, affordability is at its worst point since the mid-1980s – when sharp Fed hikes led to high double-digit mortgage rates that resulted in a greater than 50% payment-to-income ratio
• The affordability challenge back then was almost entirely driven by the interest rate environment, while incomes largely kept up with home price growth
• As of mid-June 2022, it takes 36.2% of the median household income to make the mortgage payment on the average priced home purchase, well above the 34.1% post-1980s peak in July 2006
• The monthly principal and interest (P&I) payment for the average-priced home purchased with 20% down is now over $2,100 for the first time on record, up nearly $750 (55%) so far this year and nearly 2X the $1,089 required at the beginning of the pandemic
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