Homebuyers now need about $47,000 more than they did in 2020 to comfortably afford a home, according to a recent report. Median income has risen 23% during that time.
Homebuyers now need to earn more than $106,000 to comfortably afford a home, according to a recent report from Zillow.
That is a $47,000, or 80%, increase in income from 2020. However, wages have not kept up, with median income only rising 23% during that same time, according to Zillow.
The real estate firm noted that the only major metros where a typical home is affordable for a household that is making $106,000 are Pittsburgh, St. Louis and Detroit.
As a result, buyers are often getting help from friends or family just to get into homeownership. They are also "house hacking," which is when either part or the entirety of a home is rented out for extra income, according to Zillow.
For many others, the "rapid rise in the price of homeownership over the last 4 years has been discouraging" and has led "many to drop out of the market altogether until conditions improve," Realtor.com senior economic analyst Hannah Jones told FOX Business.
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According to the Zillow report, the monthly mortgage payment on a typical U.S. home has nearly doubled, rising 96.4% to $2,188 since January 2020 for those who put down 10%. Mortgage rates at the time were near 3.5%. During Zillow's analysis at the end of February 2024, rates were about 6.6%.
Home values have also risen 42.4% since 2020, according to the report.
In February 2020, a household would need to make about $50,000 per year to afford a median-priced home in the U.S., according to Jones. As of February 2024, this minimum recommended income was about $100,000, well above the national median household income, she said.
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Jon Bostock, CEO of national home improvement company Leaf Home, said there are sometimes hidden costs that are hindering buyers now more than ever.
"What is also being missed is that property tax rates are going up, homeowners insurance are going up," he said.
The other issue is that these homes have not been fixed in a while, which means buyers are also "going to have to incur the cost of doing repairs," he said.
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Given that there are not enough skilled tradespeople, the cost of repairs will also increase, Bostock said.
Not only is there a supply and demand crisis for the availability of homes, but also with the "skilled labor that can fix those homes up to the standard that someone would want to live in, all under the umbrella of it being affordable."
The Bureau of Labor Statistics estimated that there will be 151,400 openings for construction laborers and helpers each year, on average, over the decade.
