The real estate brokerage website Redfin released a report indicating first-time homebuyers in America now need 13% more earnings, compared to 2022, in order to afford a starter home.
The report states that the necessary annual income to cover a starter home is approximately $64,500 - about $7,200 higher than last year.
The increase can be attributed to two factors: Rising home prices and mortgage rates.
The sale price of the type of home typically sought by first-time buyers increased by 2.1% compared to 2022, reaching $243,000. Rising prices can also be attributed to a limited supply of starter homes. New listings experienced a 23% decrease in June.
Sheharyar Bokhari, a senior economist at Redfin, explains the combo of rising prices/rising interest rates has made the most affordable homes out of reach for those with lower budgets.
In some parts of the U.S., the lack of affordable starters makes it difficult for buyers to find suitable options.
The overall housing market has also been impacted by the limited supply of homes.
A recent Realtor.com report indicates there were over 47% fewer available homes in June compared to pre-pandemic levels. The shortage has driven up home prices.
Mortgage rates have also played a role in affordability.
Redfin reports the average mortgage rate in June was about 6.7%, compared to 5.5% last year. The Federal Reserve's efforts to combat inflation have led to a 12 interest-rate hikes over the past year.
Fort Lauderdale, Fla., saw the largest increase in the income level needed to afford a starter home - 28% jump to $58,300.
But San Francisco, Phoenix and Austin, Texas, were the only major metros where income requirements decreased.
This upward trend highlights the challenges that prospective homeowners are facing in the market. (Redfin 07/28/23)
RELATED HOUSING INFO FROM NEW ORLEANS
For the first six months of the year, the median sale price of a single-family home was down 3.6% across the nine-parish metro region compared to the same period in 2022, according to the New Orleans Metropolitan Association of Realtors. In Orleans and Jefferson parishes, the declines were nearly twice that steep. (NOLA.com 07/30/28) Housing prices fall across New Orleans metro area in 2023 | Business News | nola.com
Regional maps of home prices in Louisiana: How home prices have changed in each New Orleans area parish | Business News | nola.com
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