Buyers Need 40% More Income To Buy Homes In Major Metro Areas, Report Says | National

(The Center Square) – Demand for homes in some parts of the country has led to dwindling supply, skyrocketing prices and buyers needing almost 50% more income than last year to even penetrate major markets, according to a report by the real estate brokerage firm Redfin.

“Housing is significantly less affordable than it was a year ago as soaring housing costs have far outpaced rising wages, meaning many Americans are now homeless” , said Redfin’s deputy chief economist, Taylor Marr.

Because more and more people are working remotely and can live anywhere to work, many are flocking to cities in the Sun Belt, with the most popular destinations being Tampa, Phoenix and Las Vegas. They are also the most expensive, with potential owners needing more than 40% more income than last year to buy.

Buyers are flocking to the Sun Belt “partly because it’s relatively affordable compared to pricey coastal job centers, but the resulting rise in home prices could make it less popular in the future,” according to the report. ‘analysis.

Tampa has quickly become the least affordable market, with homebuyers needing 47.8% more income than a year ago, more than any other U.S. metro area, according to the report.

Homebuyers in Tampa would need to make $67,353 a year to pay a monthly mortgage payment of $1,684. Last year, they were expected to earn $45,562. Most workers don’t get a $21,791 pay raise in a year, let alone a decade. This means that many who could have afforded to buy last year have been sold out. But those who can are buying with the median sale price hovering around $363,750.

Phoenix homebuyers need to earn $87,026, a 45.7% increase from the previous year, to pay a monthly mortgage payment of $2,176 in the area. The median selling price is $470,000.

Las Vegas shoppers need to make $79,620, up 45.6% from a year ago, to pay a monthly payment of $1,990. The median selling price is $430,000.

Homeowners need nearly 40% or more of income to buy in Orlando and Jacksonville, Florida, Austin, Fort Worth and Dallas, Texas, Anaheim and San Diego, California, and the Nashville, Atlanta metropolitan areas and Charlotte, North Carolina.

Redfin analyzed median home sales prices between March 2021 and March 2022. It focuses on affordability based on whether buyers are taking out loans and not paying cash. It defines a monthly mortgage payment as one that does not exceed 30% of a homebuyer’s income.

Across the country, Americans are migrating despite high costs, or because of them. A seller leaving New York with a median sale price of $677,654, for example, is more likely to afford to buy a home in Las Vegas or Tampa even if homes there are overpriced because they are much less expensive than in New York. Likewise, the cost of living is lower, and Nevada and Florida do not levy any income tax.

A record 32.3% of Redfin.com users nationwide sought to move to another metropolitan area in the first quarter of this year, a separate Redfin analysis found. That’s up from 31.5% a year earlier and up 26% from 2019.

“Soaring home prices and rising mortgage rates have made relocating to a more affordable area the only viable option for some potential buyers,” the report notes.

Nationally, homebuyers need to earn $76,414 a year to pay a monthly mortgage payment of $1,910, an increase of 34.2% over the previous year. The national median home sale is $412,687, a 17.3% increase over last year.

As housing prices soar, wages are rising, but not at nearly the same rate. The average hourly wage in the United States grown up from 5.6 percent last year, according to data from the Bureau of Labor Statistics. Over the past decade, median house prices have risen about 30% while household incomes have risen 11% over the same period, a Bankrate analysis found.

From 2019 to 2021, “the average house price-to-income ratio increased from 4.7 to 5.4 – an increase of 14.9% and more than double the recommended ratio of 2.6. In other words , houses cost 5.4 times what an average person earns in a year,” said a analysis by Clever Real Estate found. He also notes that since 1965, after adjusting for inflation, house prices have increased by 118% while household incomes have only increased by 15%.

As house prices outpace wages, inventories continue to fall. A analysis by the national associations of real estate agents and real estate agent.com points out that a household earning between $75,000 and $100,000 can afford to buy 51% of active home inventory today, when they could buy 58% of homes for sale in 2019.

A possible course correction could come from the Federal Reserve raising interest rates, and therefore mortgage rates. Marr notes: “The good news is that there is also a positive side to rising mortgage rates: they will likely slow price growth and dampen competition for homes, providing some respite for some potential buyers.

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