With economists warning of heightened anxiety about home affordability, RBC Capital Markets analyst Mike Dahl says some housing markets are “on a collision course with an affordability crisis.”

The S&P CoreLogic Case-Shiller Home Price Index reported home prices making near-record gains last year, closing with 10.4% annual growth, likely followed by rapid expansion into January. Meanwhile, Freddie Mac said the 30-year fixed mortgage rate started inching up from a record low 2.65% in January to hit 3.17% this past week.

Rapid home price appreciation amid low inventory prompted Dahl to write that “it appears almost inevitable that we’ll hit an affordability-induced indigestion period … akin to what we saw in 2018. Whether that happens next month, six months from now, or in 2022 is more of a debate.”

Dahl calculated the share of median income needed to make a monthly mortgage payment in 40 local markets and compared that share to the market’s long-term average to determine where affordability is already stretched.

The markets with the most elevated monthly averages compared to their long-term averages were Boise City, Idaho; Charlotte, North Carolina; Fort Myers, Florida; Denver, Colorado; and Orlando, Florida.


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