Are Buyers Stretched Too Thin?

With a nationwide inventory shortage, home prices are spiking, spurring bidding wars in tough-to-negotiate sellers’ markets—and yet, these conditions are not dissuading buyers from throwing their hat in the ring, even if that means stretching themselves thin to reach that homeownership goal.

According to a CoreLogic study completed for The Wall Street Journal, around one in five conventional mortgage loans given out this past winter were allocated to borrowers who are spending over 45 percent of their monthly income on their mortgage and other debts—a proportion that has tripled since 2016 and the first half of 2017.

These proportions vary by state, with standout locations such as California and Hawaii featuring exorbitant mortgage debt-to-income ratios. Using median mortgage balances compared against the median home value and income of over 2,500 cities, WalletHub recently narrowed down the cities with the highest mortgage debts. Here are the top five:

  1. Willis, Texas
    Overleverage Score: 65.77
    Mortgage Debt-to-Income Ratio: 417 percent
    Mortgage Debt-to-House Value Ratio: 190 percent
  1. Ewa Beach, Hawaii
    Overleverage Score: 65.33
    Mortgage Debt-to-Income Ratio: 1003 percent
    Mortgage Debt-to-House Value…