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  • Writer's pictureJim Carlson

Who is actually getting a mortgage right now?

Carlson Planning's Housing Market Analysis: Massachusetts, September 2023



Housing is more expensive for the average person
Housing Payments as a % of Median Income

Key Metrics:

House Payment as a Percentage of Income: 51.01%

Yearly House Payments: $50,129

Median Household Income: $98,267

30-Year Mortgage Rate: 7.2%


Affordability and Your Financial Health

At Carlson Planning, we believe in empowering you with knowledge for informed decisions. The current house payment as a percentage of income in Massachusetts stands at a concerning 51.01%. This is significantly higher than the generally recommended 30% threshold, indicating that the housing market is currently not in favor of the average homebuyer.


Who Can Actually Afford to Buy a Home?

Given the current metrics, an important question arises: Who can actually afford to buy a home and get through underwriting? With such high housing costs relative to income, it's likely that only those with substantial down payments, excellent credit scores, and stable, high-income jobs will be considered favorable candidates by mortgage underwriters.


Mortgage Rates and Your Investments

The prevailing 30-year mortgage rate of 7.2% is on the higher side., compared to the last 10 years. If you're considering buying a new home or refinancing, this rate will impact your long-term financial commitments. We recommend revisiting your entire financial picture to ensure it aligns with these market conditions.


Yearly Payments and Your Life Goals

With yearly house payments consuming over half of the median household income, this leaves less financial flexibility for other life goals, whether it's starting a family, growing a business, planning for your children's education, or preparing for retirement.


Historical Trends and Their Impact

These metrics represent a sharp increase from previous years, it could signal a housing bubble or a market that's currently unfavorable for first-time homebuyers. High costs and mortgage rates may also discourage current homeowners from making changes, affecting market liquidity. (Boomers ain't leavin' the McMansions!)


Tailored Strategies for You

Given these market conditions, we would advise caution for clients considering significant life changes like buying a home. It may be more prudent to continue renting while saving for a larger down payment or waiting for a market correction. For existing homeowners, especially those with adjustable-rate mortgages, now may be the time to explore refinancing options.


Next Steps

Your financial wellbeing is our utmost priority. We recommend scheduling a detailed financial health assessment to discuss how these market conditions impact your specific, ever-evolving financial objectives. Our adaptive strategy ensures your financial plan progresses with you, even in challenging market conditions.


Would you like to schedule a consultation to delve deeper into these issues and tailor a strategy that aligns with your financial goals?



 

Data for this analysis was sourced from Reventure Consulting's Housing Market Dashboard.


Disclaimer: The information provided in this blog post is for general informational purposes only and should not be construed as financial advice from Carlson Planning Company LLC or any of its financial planners. Carlson Planning Company LLC is an Investment Advisor registered and domiciled in the Commonwealth of MA. Markets are subject to volatility, and the data presented may have changed since the time of writing. This commentary does not constitute individualized investment, tax, or legal advice, and the opinions expressed are not recommendations to buy or sell any securities or to adopt any investment or financial planning strategy. Data cited is sourced from Reventure Consulting, Zillow, the U.S. Census Bureau, and FRED; Carlson Planning Company LLC does not guarantee its accuracy, adequacy, or completeness. Investing involves risks, including the potential loss of principal. Consult a qualified financial advisor before making any financial decisions. The publication of this blog post does not create a client-advisor relationship between the reader and Carlson Planning Company LLC. As a fiduciary, we always act in the best interests of our clients; however, the information presented is not tailored to the individual circumstances of any specific reader.

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