Purchasing a home for the first time will require those hoping to do so to have higher earnings compared to last year, Redfin has found.
In a report released Friday, Redfin said the amount of money first-time homebuyers have to bring in per year to be able to cover a starter home stands at about $64,500. It hovered around $7,200 lower for the necessary income last year, according to the report.
The real estate brokerage attributed the 13% year-over-year spike to two factors that have seen increases, home prices and mortgage rates.
HIGH MORTGAGE RATES WILL WEIGH ON THE HOUSING MARKET FOR YEARS
The type of home that first-time buyers would generally go after saw a 2.1% lift in sale price compared to 12 months earlier in June, hitting $243,000, according to Redfin.
Limit supply has contributed to how much the average starter home costs going. For such places, new listings posted a year-over-year dip of 23% in June, the report found.
“Buyers searching for starter homes in today’s market are on a wild goose chase because in many parts of the country, there’s no such thing as a starter home anymore,” Sheharyar Bokhari, senior economist at Redfin, explained in a statement. “The most affordable homes for sale are no longer affordable to people with lower budgets due to the combination of rising prices and rising rates.”
The overall market had over 47% fewer available homes in June compared to the typical amount pre-pandemic, according to a recent Realtor.com report.
Meanwhile, Redfin pegged mortgage rates on average at about 6.7% in June. At the same time in 2022, they had been around 5.5%, according to its report.
Those are sensitive to interest rates, which apart from a pause last month have seen a largely steady climb over the past year or so thanks to the Federal Reserve trying to bring down inflation, FOX Business previously reported. The most recent rate increase came Wednesday, upping it by a quarter of a point.
FED HIKES INTEREST RATES TO 22-YEAR HIGH AS INFLATION FIGHT RESUMES
The report also found Florida was home to the city where how much income first-time homebuyers needed went up the most. People aiming to acquire a starter house saw the income level needed climb 28% in Fort Lauderdale to $58,300, according to Redfin.
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On the other hand, the real estate brokerage identified San Francisco, Phoenix and Austin as the “only three major U.S. metros” to show drops in that regard.
Mortgage payments in the U.S. have hit $1,610 per month for a typical starter home, according to Redfin.
Megan Henney contributed to this report.
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