Blomquist: u201cThe cost of financed homeownership is becoming dangerously disconnected with still-stagnant median incomes.u201d

IRVINE, CA-Monthly house payments for homebuyers increased an average 21% from a year ago in 325 US counties, according to RealtyTrac. The higher payments resulted from a 10% rise in median prices and a 33% rise in average interest rates for a 30-year fixed-rate mortgage, the firm reports.

According to Daren Blomquist, VP for RealtyTrac, “A potent combination of rapidly rising home prices and the often-overlooked but significant uptick in interest rates in the second half of 2013 caused the monthly cost of owning a home using traditional financing to jump substantially in many markets over the last year. The monthly cost of owning a home is still less than renting n the majority of markets, but the cost of financed homeownership is becoming dangerously disconnected with still-stagnant median incomes, driven not by shoddy underwriting practices this time around, but by investors and other cash byers who are not tethered to the typical affordability constraints.”

Blomquist adds that just looking at the minimum income need to qualify for a median-priced home in some markets shows the extent of the disconnect between prices and incomes. “For example, in Los Angeles County, the minimum qualifying income needed to purchase a median-priced home is at more than $95,000, up from about $68,000 a year ago.”

Blomquist tells, “The most desirable end game for home price trends is flattening of home price appreciation in 2014 so that home prices don’t continue floating further away from incomes. This is a likely scenario in the majority of markets where affordability is less of an issue already. Unfortunately, in the more speculative and capricious markets like coastal California and Florida and places like Phoenix, Las Vegas, etc., the end game is more likely that the momentum from this past 18 months will push prices further out of touch with incomes. However, it’s less likely there will be a bubble bursting and more likely just a chilling effect on the number of sales happening—something we are already seeing in these markets.”

The firm’s research also shows that despite the increase in costs to buy with financing, the estimated monthly house payment for a median-priced three-bedroom home in the fourth quarter of 2013 was still lower than average fair-market rent for a three-bedroom home—set by HUD—in 91% of the counties analyzed. But the 29 counties where estimated monthly house payments were higher than fair-market rents accounted for 20% of the population for all 325 counties analyzed. These 29 counties included Los Angeles, Orange, Santa Clara, Alameda, Ventura and San Francisco in California; King County, WA; Suffolk and Westchester counties in the New York City region; Will County in the Chicago metro area; and Denver County, CO.

Among the 15 most-populated counties analyzed, the estimated monthly house payment increased an average of 34% form a year ago, making the house payments higher than the average fair market rent for a three-bedroom home in six of those 15 largest counties. A year ago, only one of those 15 counties—Santa Clara County—had an estimated monthly house payment above the average fair-market rent.

As reported last week, there were a total of 30,226 bank repossessions of US residential properties in January, down 4% from the previous month and down 40% from January 2013, reports RealtyTrac. The firm says REO levels were at their lowest last month since 2007, marking a 78-month low.