Between much higher home prices and sharply higher interest rates, the monthly payment on a typical home purchased in metro Denver last month was 54.5% higher than it was a year ago.
Between much higher home prices and sharply higher interest rates, the monthly payment on a typical home purchased in metro Denver last month was 54.5% higher than it was in May 2021, according to anThat “typical” payment in Denver hit $3,394 a month in May, which is above the national average of $2,031 and above the typical rent payment in metro Denver of $1,988 captured in the Zillow Observed Rent Index. Rent inflation is running 14.2% a year in metro Denver, a fraction of the 54.
Those who owned a home before the pandemic or who took advantage of low rates in 2020 and 2021 to purchase a home or refinance a mortgage are sitting in a much better position than those who are still looking to buy. And as bad as May was, the situation deteriorated further this month. “Mortgage rates took an unprecedented leap skyward over the past two weeks and quickly multiplied housing costs as they rose,” said Zillow economist Nicole Bachaud, in a release. “We are already seeing signs of waning demand, and expect these recent rate hikes to quicken the market’s needed rebalancing. While shoppers will likely experience less competition for homes than the frenzied recent months, their purchasing power has dwindled.
Income gains of around 6% can’t keep pace, creating the most significant affordability challenges in 15 years, Zillow warned. April numbers showed monthly payments nationally were consuming 28% of homeowners’ monthly incomes. Given the recent rise in interest rates, that ratio has likely reached close to the red zone of 30%. When affordability last bottomed out at these levels in July 2006, a housing crash followed.
Essentially, homebuyers hardy enough to be braving the market in metro Denver are paying 1.5 times more than what they would have 12 months earlier for a comparable mid-range home.
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