According to an analysis from real estate brokerage Redfin, American homebuyers need to earn six-figure salaries in order to purchase a median-priced home.
With median house prices remaining high and the monthly mortgage payment on the typical home surging more than 45% since the same time last year to reach $2,682, the annual salary required to afford such a property has increased from $73,668 to $107,281. Average hourly wages have only gone up 5% during that same time period.
Last month, US home buyers needed to make about $107,000 annually, up from about $74,000 a year earlier, to afford a median-priced home, according to Redfin.
That’s an increase of nearly 46%.
— unusual_whales (@unusual_whales) November 26, 2022
“High rates are making buyers rethink their priorities, as many of them can no longer afford the home they want in the location they want,” Redfin Agent Chelsea Traylor, who works in Washington, D.C., commented. “If you had a $900,000 budget a few months ago, rising rates mean it’s now around $700,000 — and sellers aren’t dropping their prices enough to make up for the change. So buyers are searching further away from the city in more affordable areas.”
“I’m encouraging buyers to think long term,” she continued. “Prices are unlikely to fall drastically in the long run, so buying a home now — if you can afford the monthly payment — will still help you build wealth over time, especially if you plan to live in it for several years. Even though rates are high, another advantage of buying now is the lack of competition and opportunity to negotiate with sellers.”
A year ago Redfin indicated that homebuyers only needed six-figure salaries to afford a median-priced home in 16 metropolitan areas. Currently, there are 45 metro areas where this is the case.
The US housing market is expected to be 30 percent smaller in 2023 than in 2021.
— Paul G Nelson (@InsuranceGuy24) November 28, 2022
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