09/27/2024
Report: Homebuying Became More Affordable for the First Time Since 2020
by Phil Hall | Sep 24, 2024 | News/Current Events, Real Estate News, U.S. Housing Market, WRE News Exclusive
A new data report from Redfin (NASDAQ: RDFN) has determined homebuyers need an annual income of $115,454 to afford a $433,101 median priced home – a 1.4% decline from one year earlier and the first annual decline since June 2020, when mortgage rates were at a record low.
Redfin attributed the new affordability to mortgage rates posting their first annual decline in three years. The data is based on a Redfin analysis of the estimated median household income and median monthly housing payments as of last month.
However, Redfin also acknowledged that the average American household still cannot afford to buy a home. The typical household earns an estimated $83,853 per year, which is 27.4% less than the $115,454 they need to afford the typical house. Thus, a household on the median income would need to spend 41.3% of their earnings on housing to buy the median priced home – and less than one-third of home listings are affordable for the typical household, down from more than half before the pandemic.
Redfin added that February 2021 was the last month on record when the typical household earned enough to afford the median priced home – at the time, the median household income was $69,021, or 5.7% more than the $65,308 needed to afford the typical home.
Nonetheless, Redfin Senior Economist Elijah de la Campa stressed this is a good time for prospective buyers to get off the sidelines and start house hunting.
“Housing affordability is improving for the first time in four years, so if you want to buy a home and can afford to, now could be a good time because it’s unlikely to become markedly cheaper in the near future,” he said. “Many house hunters are waiting to see if mortgage rates fall a lot further, but that probably won’t happen anytime soon. That’s because the Fed’s latest interest rate cut and its plans for future cuts were highly anticipated, meaning they’re already mostly priced into mortgage rates. When the Fed cuts short-term interest rates, long-term rates like mortgage rates don’t always move down nearly as much.”
https://wrenews.com/report-homebuying-became-more-affordable-for-the-first-time-since-2020/
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