Image by Todd Kent
Originally posted on Fox 2/By: Katlyn Brieskorn, Addy Bink
TAMPA, Fla. (WFLA/NEXSTAR) — Buying a house in the U.S. isn’t cheap, and according to a report from Redfin, it is now harder than ever to afford one.
Sky-high mortgage rates and rising home prices have made it more difficult than ever, especially for first-time home buyers, Redfin said in the report, which was released Tuesday.
The average rate on the benchmark 30-year home loan rose to 7.57% from 7.49% last week, mortgage buyer Freddie Mac said earlier this month. It’s the highest level in more than two decades.
To afford a median-priced U.S. home now, Redfin said buyers must earn $114,627, up 15% ($15,285) from a year ago and up more than 50% since the start of the pandemic. The real estate website said a typical household earns about $40,000 less than that.
St. Louis stats:
“Hourly wages have risen in 2023, but not nearly as fast as the income necessary to afford a home is rising: The average U.S. hourly wage has increased by about 5% over the last year,” Redfin reported.
“In a homebuyer’s ideal world, rising mortgage rates would push demand and home prices down enough to make up for high-interest payments. 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,” said Redfin Economics Research Lead Chen Zhao.
With a median home sale price of more than $1.48 million, you’ll need the greatest annual income — $404,332 — in San Francisco. When ranked based on the necessary income for homebuyers, seven California cities ranked at the top of the list. After San Francisco, it was San Jose, Anaheim, Oakland, San Diego, Los Angeles and Oxnard.
Another West Coast city, Seattle, also landed in the top 10, followed by New York City and Boston.
If you’re looking for a cheaper option, you’ll want to shop in the Midwest. Detroit had the lowest necessary annual income in Redfin’s report at $51,793: a median home costs just less than $190,000 in the Michigan city. Three Ohio cities — Akron, Dayton and Cleveland — were close behind, all requiring an income of around $60,000.
The interactive table below shows the annual income you’d need to earn to afford a median-priced home in the largest U.S. metros, as well as the median home-sale price, courtesy of Redfin.
Income Needed to Afford a Home in US Metros
As of August 2023
Redfin said the data is based on an analysis that compared median monthly mortgage payments in August 2023 and August 2022. To be considered affordable, a homebuyer must spend no more than 30% of their income on housing.
