The
last
two
years
of
soaring

mortgage
rates
and
rising

home
prices
have
brought
the
fastest
erosion
in
housing
market

affordability
in
modern
history,
and
it’s
hurt
first-time
homebuyers
the
most.

A
homebuyer
must
earn
$114,627
to
afford
the
median-priced
U.S.
home,
up
15%
($15,285)
from
a
year
ago
and
up
more
than
50%
since
the
start
of
the
pandemic
in
early
2022.
That’s
the
highest
annual
income
necessary
to
afford
a
home
on
record. Meanwhile,
wages
have
only
increased
by
5%
since
2022.

To
conduct
this
analysis,
Redfin
compared
median
monthly
mortgage
payments
for
homebuyers
in
August
2023
and
August
2022. 

On
Thursday,
30-year
fixed-rate
mortgage
rates

crossed
the
8%
threshold,
according
to
Mortgage
News
Daily.
In
March
2022,
the
30-year
fixed-rate
mortgage
averaged
3.56%.

Meanwhile,
the
median
price
for
a
U.S.
home
was
$420,000
in
August,
up
3%
compared
to
August
2022. At
the
start
of
the
pandemic,
the
median
sales
price
was
$260,062.

In
the
latest

September
existing
home
sales
report, 
the
median
price
remained
2.8%
higher
than
in
September
2022.
On
a
month-to-month
basis,
the
payment
for
the
average
U.S.
buyer
hovers
around
$2,866,
an
all-time
high
according
to
Redfin. 

Of
course,
high
mortgage
rates
and
home
prices
don’t
harm
all-cash
buyers and
move-up
buyers
as
greatly.

In
terms
of
metro-level
disparities,
the
quintessential
“zoomtown”
of
Miami
is
where
income
needed
to
buy
the
median
home
rose
the
most.
Interesting,
Austin,
another
zoomtown,
was
the
metri
that
saw
the
smallest
uptick.

Metro
breakdown

In
both
metro
Miami
and
Newark,
homebuyers
need
to
earn
33%
more
than
they
did
in
2022
to
afford
a
median-priced
U.S.
home.
For
instance,
homebuyers
in
Miami
now
need
to
make
$143,000
to
afford
the
monthly
mortgage
payment
of
$3,580.
In
Newark,
buyers
need
$160,000.

In
Bridgeport,
Connecticut,
Dayton,
Ohio,
Rochester,
New
York
and
Hartford,
Connecticut,
the
necessary
income
also
increased
by
over
30%.
However,
Austin
was
a
place
where
the
necessary
income
to
buy
a
house
increased
the
least,
by
only
8%.
Today,
homebuyers
need
to
earn
$126,000
to
afford
a
median-priced
home
in
Austin.
Meanwhile,
buyers
in
San
Francisco
and
San
Jose,
the
most
expensive
markets
in
the
country
must
earn
more
than
$400,000
to
afford
the
median-priced
home
in
their
area.

Inventory
remains
one
of
the
driving
forces
in
this
difficult
housing
market.
According
to
another
study
by

Redfin,
2023
is
poised
to
end
with
roughly
4.1
million
existing
home
sales
nationwide,
the
lowest
number
since
the
housing
bubble
burst
in
2008. 

In
its

latest
economic
commentary,
the 

Fannie
Mae’s
Economic
and
Strategic
Research
(ESR)
group
latest
commentary,

Doug
Duncan,
Fannie
Mae’s
senior
vice
president
and
chief
economist,
said
that
he
does
not
anticipate
affordability
issues
will
ease
in
2024. 

“We
expect
the
higher
mortgage
rate
environment
to
continue
to
dampen
housing
activity
and
further
complicate
housing
affordability
into
2024,”
Duncan
said.