According to a new survey from Clever Real Estate, a St. Louis-based real estate company, a median-priced home in the U.S. now costs a staggering $332,494, meaning potential buyers need an income annual of at least $119,769 to be able to pay it with a 10% down payment.
That’s about $45,000 more than a typical household earns annually ($74,755); even with a 20% down payment, homebuyers would need to earn at least $98,202, still well above the typical salary.
“The last year in which the average buyer contributed 20% was 1989, according to data from the National Association of Realtors (NAR). Today, the average buyer contributes only 15% of the purchase price of a home,” says the Clever Real Estate report.
According to the real estate company, a middle-income family looking to afford a mid-priced home would need a hefty 45% down payment, or mortgage rates would have to drop from the current rate of 7.2% to 4% to make it work.
Even with a savings rate of $1,000 each month, it would take a household five and a half years to accumulate the $66,500 needed for a 20% down payment on a home with a median price of $332,494.
Clever Real Estate points out that as things stand, 61% of Americans are priced out of the market even with a 20% down payment.
Data reveals that median housing is affordable for people with median incomes in only 4 states (West Virginia, Ohio, Iowa and Indiana) and 6 of the 50 largest metropolitan areas:
· Pittsburgh, Pennsylvania
· Cleveland, Ohio
· St. Louis, Missouri
· Memphis, TN
· Indianapolis, Indiana
· Birmingham, Alabama
“Unsurprisingly, Los Angeles is the least affordable city, where buyers need an income of a whopping $249,471 to comfortably afford a median-priced home, nearly three times the actual median income of $87,743,” notes Clever Real Estate.
For more details of the report and its methodology, go here.
Keep reading:
· Real estate market myths that affect buyers and sellers in the US today.
· Housing: Do you have plans to buy a house? Mortgage rates continue to rise
· Places homebuyers are moving to in the US.