A household now needs to make six figures to afford a median-priced home in the U.S. That’s according to a Realtor.com analysis released Thursday, which found that the income required to affordably purchase a home listed at the median price has risen 70.1% since 2019, from $67,000 to the current level of $114,000.
The median listing price was $431,250 nationally in April, according to Realtor.com. The $114,000 needed to afford that home assumes a 30-year fixed-rate mortgage, a 20% downpayment and no more than 30% of gross monthly income spent on housing.
The real estate listings company noted that “the widening gap is fueled by a combination of rapid home price appreciation and elevated mortgage rates,” with certain metropolitan areas feeling a greater affordability squeeze.
Four California metros ranked in the top five for the most income needed to afford a median home — including those encompassing San Jose, San Francisco, Los Angeles and San Diego — all of which require household income greater than $250,000. California was one of seven states to receive an F grade in Realtor.com’s recent report cards on housing affordability and new construction activity.
The Seattle-Tacoma-Bellevue metro area in Washington state ranked fifth. Households need $206,777 to afford a median-priced home in the greater Seattle area, a 54.9% increase from 2019.
The Memphis, Tenn., metro area (which includes portions of Mississippi and Arkansas) has seen the largest percentage increase, where the income required to afford a median home has risen 94.8% since 2019. It’s followed by Providence-Warwick, R.I.-Mass. (92.8%); the greater Las Vegas area (86.5%); and the Hartford, Conn., metro area (86%).
Realtor.com sees reasons for optimism for potential homebuyers in the fact that 18% of listings nationwide saw price reductions in April. Additionally, the company noted that active listings were up 30.6% year over year and surpassed April 2020 levels at the onset of the COVID-19 pandemic.
“Even with today’s affordability hurdles, meaningful changes in the market could give buyers a better shot at finding a home,” said Danielle Hale, Realtor.com’s chief economist, in a press release. “The number of homes for sale is rising in many markets, giving shoppers more choices than they’ve had in years. Sellers are becoming more flexible on pricing, underscored by the price reductions we’re seeing.”
Hale added: “While higher mortgage rates are certainly weighing on demand, the silver lining is that the market is starting to rebalance. This could create opportunities for buyers who are prepared.”
