According to a recent report by real estate site Redfin, the rising home prices and interest rates in the United States are making it increasingly difficult for potential home buyers to afford a house. In fact, the report states that a salary of $114,627 is needed to afford a median-priced house in the country. This figure increases significantly in the most expensive metro areas, with salaries of over $200,000 required in the top 10 cities and over $400,000 needed in the priciest two metros.
The report also highlights that while the median U.S. household income was $75,000 in 2022, the income required to afford a home is far higher. This is due to the high cost of real estate in these areas, as well as the increased cost of borrowing with higher interest rates.
The two metros that require the highest salaries are San Francisco and San Jose, California, with salaries of $404,332 and $402,287 respectively. Other California metros, such as Anaheim, Oakland, and San Diego, also make the top five.
Interestingly, the New York metro area ranks ninth on Redfin's list, despite the high cost of living in Manhattan. This is because the metro area extends beyond Manhattan and includes more affordable outlying areas.
One of the challenges faced by potential homebuyers is the competition from all-cash buyers, who are often veteran homeowners using their home equity to make cash offers. This can make it difficult for first-time homebuyers to enter the market, resulting in a decrease in their share of the housing market.
Overall, the report highlights the increasing difficulty for potential homebuyers to afford a house in the current market. The combination of rising home prices, higher interest rates, and competition from all-cash buyers is making it challenging for many individuals and families to achieve their goal of homeownership.