Thanks in part to very low mortgage interest rates, currently around 3.3 percent, monthly home payments are affordable for the average buyer.
Zillow reports that as of Q2 2016, a person earning the U.S. median income and buying a median-priced U.S. home spends 14.4 percent of his or her income on a monthly mortgage payment. In the same conditions, renters spend 29.9 percent of their income on rent.
But the national housing market is really just a collection of local markets, and affordability looks pretty different across metros as local incomes, rents and home values change. In five of the largest 35 metro areas analyzed nationwide (San Jose, Los Angeles, San Francisco, Miami and Portland), buyers can currently expect to pay slightly more of their income today on a mortgage than they would have in the pre-bubble years – even with today’s very low mortgage rates. And in two large markets (Sacramento and Pittsburgh), affordability has improved somewhat for renters compared to the pre-bubble years.