Pain at 5 percent: Stockton, Calif.
Monthly income devoted to mortgage bill:
- Historic average: 24.7 percent
- At 5 percent interest rate: 26.3 percent
Yes, it’s more than a little bizarre to have a bankrupt city top a list of places where buyers could get priced out if mortgage rates keep rising. But a glut of homeowners, whose mortgages outweigh the value of their homes, has limited the supply of homes here. That’s led to dramatic price gains — but not so dramatic that it flips the balance for those homeowners. In 2013’s third quarter, 18.7 percent of monthly income went to pay the mortgage, a drop from the average of 24.7 percent from 1985 to 1999. If mortgages hit 5 percent, that jumps to 26.3; at 6 percent, to 29.4 percent. Zillow projects that the median price of a home in Stockton will rise 22.8 percent by September, to $255,861; the median income is $50,128.