Zillow: Charlotte renters pay nearly 27% of monthly income on housing

Rents continue to skyrocket in Charlotte and the rest of the U.S., while paying for a home mortgage is and will continue to be considered affordable even if mortgage rates go up.

In Charlotte, which is experiencing an apartment boom, renters paid an average of 26.8 percent of their monthly incomes on housing in the second quarter, a report Thursday from real estate data firm Zillow showed.

That’s higher than the historical average of 18 percent of their incomes they paid on housing from 1985-2000, Zillow said, but lower than the current national average of 30.2 percent, the highest percentage ever.

“There are good reasons to rent temporarily – when you move to a new city, for example – but from an affordability perspective, rents are crazy right now,” Zillow Chief Economist Svenja Gudell said in a statement.

Charlotte has more than 10,000 apartment units under construction, and about the same number planned. Experts say the growing supply could cause rent growth to slow.

Charlotteans pay an average of 13.2 percent of their monthly incomes on mortgage payments and can expect to pay 17.1 percent if mortgage rates rise to 6 percent, Zillow forecasts. A 30-year fixed rate mortgage rate is currently about 4 percent.

Historically, Charlotte homeowners paid 18.8 percent of their monthly incomes on mortgage payments from 1985-2000, and nationally, homeowners paid 21.3 percent on average.

Nationwide, homeowners in the second quarter paid on average 15.1 percent of their monthly incomes on mortgage payments and can expect to pay 19.5 percent when mortgage rates reach 6 percent, Zillow estimates.

Zillow determined affordability by analyzing the current percentage of a metropolitan area’s median income necessary to afford the rent or monthly mortgage payment on a median-priced home or apartment. Zillow assumed a 20 percent down payment and a 30-year, fixed-rate mortgage to determine mortgage affordability.

This story was originally published August 13, 2015 at 10:10 AM with the headline "Zillow: Charlotte renters pay nearly 27% of monthly income on housing."