The site's calculations assume that a buyer spends 28 percent of gross monthly income on housing, including principal, interest, taxes and insurance, (in line with industry guidelines for standard "front-end" debt ratios) and makes a 20 percent down payment on a house. To calculate the cost of buying the median-priced house in a given urban area, HSH.com combines its own average interest rate for 30-year, fixed-rate mortgages in the fourth quarter; the National Association of Realtors’ data on median-home prices in the fourth quarter; average metropolitan property tax data from the Tax Foundation, a Washington-based think tank; and statewide average homeowner insurance premium costs from the Insurance Information Institute, an industry organization.
The data is, of course, an estimate — for one, property taxes and insurance costs will vary depending on the property — but it gives you a good idea of how housing costs varied around the country in the fourth quarter. You can read more about the methodology and see the site's data here.
More stories from Know More: