By DON FENLEY

TRI-CITIES, Tenn. – Local housing affordability deteriorated to new lows in June because of rising mortgage rates and the housing shortage.

In the region’s most expensive market, it took a record $2,051 and 40.2% of the Washington Co. owner’s income to cover the current monthly mortgage.

And the region’s most affordable market – Greene Co. – is approaching the recommended level for owners to spend on housing before crossing the affordability line. The average cost of the mortgage principal, taxes, insurance, and private mortgage insurance is up $204 a month (+15.5%) since the first of the year. That’s the biggest bite in the six local counties monitored by the Atlanta Federal Reserve Bank’s Home Ownership Affordability Tracker.

Although the local home price growth rate is slowing, current conditions don’t point to a price decline. The current year-to-date regional median price is 10.5% higher than it was this time last year. There has been one small month-over-month price decline of $2,100 in March.

The current annual US outlook is for a 4% percent increase. So far, local prices have outperformed the US price growth.

The 30% of income on housing has been a rule of thumb since 1981 when studies found that people who spend over 30% of their income on housing were “cost burdened.” Owners who a more accepting of risk and willing to have less discretionary income are taking the threshold approach to budgeting. That model calls for homebuyers to spend only 40% of the income on housing.

Here’s how the Jan.-June Affordability Tracker numbers look. The monthly mortgage includes the principal, insurance, taxes, and private mortgage insurance.

WASHINGTON CO.

• Mortgage – $2,051, up $96 a month since Jan.
• Percent of income owner spends on housing – 40.2%

UNICOI CO.

• Mortgage – $1,648, up $139 since Jan.
• Percent of income owner spends on housing – 35.5%

SULLIVAN CO.

• Mortgage – $1,629, up $101 since Jan.
• Percent of income owner spends on housing – 37.7%

HAWKINS CO.

• Mortgage – $1,582, up $52 since Jan.
• Percent of income owner spends on housing – 33.3%

CARTER CO.

• Mortgage – $1,543, up $149 since Jan.
• Percent of income owner spends on housing – 36.4%

GREENE CO.

• Mortgage – $1,524, up $204 since Jan.
• Percent of income owners sends on housing – 29.1%

Categories: REAL ESTATE