Buying a home wasn’t always this expensive.

The average income-earner needs to spend a significant portion of their income on mortgage payments in order to buy a home pretty much anywhere in the U.S., but this ratio is exorbitant in California. In fact, the top home-price-to-household-income ratios are found in the Golden State.

The average mortgage payment for today’s would-be homebuyer totals:

Inland areas are not as bad off, with potential homebuyers in Sacramento spending 29% and homebuyers in Riverside spending 28% of their income on mortgage payments.

In contrast, the national average household income spent on the typical U.S. home is just 17.5%, up from 15.4% a year earlier. For perspective, financial experts advise spending no more than 31% of a household’s income on housing payments.

The future of home prices

Today’s extreme home prices, along with rising interest rates, are hacking away at buyer purchasing power, straining the homeownership pipeline.

This dynamic is hardest on first-time homebuyers and other shopping within the low tier. Within these pricey metros, homebuyers shopping for homes in the bottom-third of home values (the low tier) can expect to spend about twice as much of their income on mortgage payments than a homebuyer shopping in the high tier.

Further, rising interest rates impact buyers across all price tiers. The average mortgage rate is 0.75 percentage points higher than a year earlier as of September 2018. On a $500,000 mortgage, this increase amounts to mortgage payments 10% higher than a year earlier. Or, for those operating at the top of their budget, this means homebuyers qualify for significantly less house than they did this time last year.

While homebuyers have it bad, renters are even worse off in California. For example, in Los Angeles, the average low-income renter needs to spend 121% of their income to rent a low-tier rental. An impossible situation, these renters either need to live with roommates or rely on housing assistance.

Renters who overspend on rent are less likely to be able to save up for a down payment, needed if they are ever to become homebuyers. In fact, 60% of renters who pay more than 36% of their income on rent have no savings to speak of, according to Zillow.

With renters and potential homebuyers alike feeling the strain of higher housing costs and rising interest rates, the future for today’s rising home prices is stark. That’s because home prices are ultimately determined by how much homebuyers are able (and willing) to pay, termed buyer purchasing power.

As this figure continues to fall with each interest rate increase, expect prices to eventually trend down. This is already beginning to occur in some parts of the state, with price cuts hitting a post-recession high this summer.