AI Image
Home affordability gap for first-time buyers widens as costs rise
WYFF • • business
Key Points:
- The monthly mortgage payment for a typical U.S. starter home is $2,158, requiring an income of at least $103,584, while the median income for first-time buyers is only about $72,100.
- First-time buyers can generally afford homes at about 60% of the median home sale price, which is significantly lower than the National Association of Realtors' definition of a starter home at 85% of median home value.
- The home affordability index for first-time buyers has been below 100 since 2021, indicating that starter homes are largely unaffordable for families earning median incomes.
- The lack of affordability is not due to a shortage of starter homes, which have actually increased over the past 20 years, but is driven by high rent costs, rising interest rates (currently 7.28%), and many starter homes being held long-term by owners.
- Approximately 80% of U.S. metropolitan areas have affordability scores below 100 for first-time buyers, highlighting widespread challenges in accessing starter homes at the local level.
