Despite home prices increasing dramatically over the last two years, average incomes have hardly budged.
- The average income needed to buy a house in some cities has nearly doubled, but the actual income has stayed about the same.
- According to the Census Bureau, median household income was $70,784 in 2021, a slight drop from 2020 when it was $71,186.
- For the seventh month, pending home sales dropped, reaching the lowest levels since 2011, as fewer potential home buyers are able to make a purchase.
Why it’s news
As we reported yesterday, home prices are starting to decline after a 1.6% slide in year-over-year home price growth from July to August.
The drop is the largest one-month decline in the 27-year history of the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.
But prices are still 15.8% higher than July last year, meaning that even with the price drop potential home buyers are struggling to find something in their budget. With skyrocketing interest rates, finding a home that buyers can afford is even more difficult.
If nothing changes in the average income levels, housing prices will need to fall much further before homebuyers can afford to make a purchase.
The minimum amount a household needs in order to purchase the average home has changed dramatically from 2020 to 2022. Here are some of the most shocking examples. . .
- In 2020, homeowners in Tampa, Florida, needed an income of $32,472. Now that number is $72,255.
- Austin, Texas, homeowners needed $47,641 in 2020 but now need $103,080.
- Homeowners in Jacksonville, Florida, needed an income of $32,673 in 2020. Now they need $69,962.
- In 2020, Raleigh, North Carolina, homeowners could expect a $39,420 income to cover the average mortgage, but now they will need $83,349.
- Miami, Florida, homeowners needed $41,897 for the average mortgage in 2020. This year they need $87,536.