Are rising home prices making homeownership more difficult for many potential buyers? According to a recent article in the Wall Street Journal (reprinted on Realtor.com), roughly one in five conventional mortgage loans made this past winter went to borrowers spending more than 45% of their monthly incomes on mortgage payments and other debts, the highest proportion since the housing crisis. In addition, they report economists are saying rising debt levels are a symptom of a market where home prices are sharply rising in relation to incomes, which they blame on a lack of supply.
“Economists warn that lenders must tread carefully in making credit more available, given the role easy mortgages played in creating the last housing bubble. The share of new buyers with debt-to-income levels in the 46% to 50% range remains well below the peak of just under 37% registered in 2007, but is nearing the levels of 2004-05, the years leading up to the bubble, CoreLogic data show.”