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OT: Americans Now Need A Six-Figure Salary To Afford A Median-Priced Home

Homebuyers in the United States must earn six-figure salaries in order to afford a median-priced home, according to an analysis from real estate brokerage Redfin.

As housing prices remain elevated and the monthly mortgage payment on the typical home surges 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 nominally increased 5% over the same period as inflation continues to erode consumer purchasing power.

“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.”

Four of the five metropolitan areas with the most rapid increase in annual income required to afford a median-priced home are located in the state of Florida. Buyers in the city of North Port must earn $131,535 to afford a $3,288 monthly payment, while those in Miami, Tampa, and Cape Coral must likewise collect six-figure salaries.

Meanwhile, the five metropolitan areas requiring the highest income are all in California, with buyers in San Francisco needing a $402,821 salary to afford a $10,071 monthly payment. A previous report from the National Association of Home Builders likewise found that all of the least affordable real estate markets in the country are in the Golden State.

Florida saw the nation’s largest net domestic migration between July 2020 and July 2021, with more than 220,000 people moving to the state, according to data from the Census Bureau. Florida was followed by Texas and Arizona, while New York, California, and Illinois led the nation in terms of population decline.

Traylor remarked that some buyers are waiting for prices or rates to decrease before they purchase a home. “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.”

As of one year ago, homebuyers only needed six-figure salaries to afford a median-priced home in 16 metropolitan areas considered by Redfin. Today, however, such conditions exist in 45 cities.

Recent declines in housing affordability occur as mortgage rates witness one of the largest sustained increases in decades. The 30-year fixed mortgage rate remained below 3% for much of the past two years, according to data from government-backed mortgage company Freddie Mac. The rate surged from approximately 3% earlier this year to more than 7% earlier this month, with most of the increases occurring after the Federal Reserve hiked target interest rates at four consecutive 0.75% increments.

https://www.dailywire.com/news/americans…