You need to make at least $64,500 a year to afford your first home, says Redfin
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- Buying your first home has become even less affordable, Redfin said.
- Buyers now need to make at least $64,500 a year to afford a starter home, up 13% in 12 months.
- Many on lower budgets can no longer stretch to even the most affordable homes, per Redfin.
First-time buyers are finding homes even less affordable, according to Redfin.
The real estate brokerage revealed first-time buyers must make about $64,500 a year to afford a starter home – 13% more than a year ago.
"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," Redfin senior economist Sheharyar Bokhari said in a blog post.
"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. That's locking many Americans out of the housing market altogether, preventing them from building equity and ultimately building lasting wealth," she added.
According to Redfin, the typical starter home sold for a record $243,000 in June – up more than 45% from pre-pandemic levels.
Higher interest rates and low housing inventory have dialed up the pressure on US homebuyers.
A string of interest-rate hikes by the Federal Reserve have made mortgages more expensive. Meanwhile, scarce housing supply has kept pushing up prices over the past year.
New York, Chicago and Atlanta are among cities where buyers need higher incomes to afford a starter home, while San Francisco, Austin and Phoenix are the only cities where they've become more affordable.