Here’s How Much You Have To Earn To Afford The Median Home

October 20, 2023

n a hopeful sign for buyers, home prices on a national basis recently dipped slightly. But a new report from real estate brokerage Redfin provides a sobering dose of reality.

The income required to afford the median-priced home is rising – and rising quickly.

According to Redfin, the typical U.S. home sold for about $420,000 in August, up 3% year over year and just about $12,000 shy of the all-time high hit in mid-2022. To afford that home at today’s mortgage rates, you need to earn $114,627 a year. That’s 15% more than a year ago and 50% more since the start of the pandemic.

“In a homebuyer’s ideal world, rising mortgage rates would push demand and home prices down enough to make up for high-interest payments,” said Redfin Economics Research Lead Chen Zhao.”But that’s not what’s happening now. Although new listings are ticking up slightly, inventory is still near record lows as homeowners hang onto their low mortgage rates—and that’s propping up prices.”

Even though the sale of existing homes fell in September at the steepest rate in 13 years it has had little effect on prices. Sales are falling, in part, because of the lack of available homes.

There are fewer homes for sale for two main reasons. Since 2008 builders have significantly reduced production. Secondly, current homeowners with a 3% mortgage aren’t selling. Zhao says people who want to buy a home – especially first-time buyers – have to get creative.

Thinking outside the box

“Consider a condo or townhouse, which are less expensive than a single-family home, and/or consider moving to a more affordable part of the country or a more affordable suburb,” Zhao said.

By submitting this form, you are consenting to receive marketing emails from: Harlem World Magazine, 2521 1/2 west 42nd street, Los Angeles, CA, 90008, You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

How did home prices get to this level? Simple. When mortgage rates were 3% in 2020 and 2021, many people could afford to pay more for a home. A budget of $325,000 suddenly became affordable at $400,000. Sellers raised prices because they could.

Now that mortgage rates have risen to 7%, there are fewer qualified buyers – but enough qualified buyers to keep prices from falling reports Consumer Affairs.

We're your source for local coverage, we count on your support. SPONSOR US!
Your support is crucial in maintaining a healthy democracy and quality journalism. With your contribution, we can continue to provide engaging news and free access to all.
accepted credit cards

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Articles