Zillow: Here's the Rate Drop That Makes Homes Affordable

An analysis from Zillow and flagged by Fast Company paints a grim picture for anyone hoping for a sudden return of affordable housing in the US. According to the report, the average 30-year mortgage rate would have to fall to 4.43%—Bankrate puts the current national average at 6.36%—for a median-income buyer to afford a median-priced home, assuming they can put down 20%. (Afford, in this case, means no more than 30% of household income would be spent on housing.) "That kind of a rate decline is currently unrealistic," quips Zillow economic analyst Anushna Prakash.

The situation is even more dire in expensive coastal cities like New York, San Francisco, and Los Angeles. In these markets, Zillow says, even a 0% mortgage rate wouldn't make a median-priced home affordable for the typical local household. By contrast, some Midwestern cities (Chicago, Cleveland, Louisville, and Detroit among them) remain within reach for median-income earners even at at 6.7% rate, per Zillow's analysis. However, the analysis comes with a caveat: it assumes all other factors stay the same, meaning that decrease in rates couldn't be accompanied by higher sale prices.