105 0 Kommentare First-Time Buyers Must Make $76,000 to Afford the Typical U.S. Starter Home–Up 8% From a Year Ago - Seite 2

“The pandemic housing-market boom changed the definition of a starter home,” said Redfin Senior Economist Elijah de la Campa. “A decade ago, many people thought of a starter home as a small three-bedroom single-family house. Now that type of home could cost seven figures, especially in expensive parts of the country. The most affordable homes are much smaller and often require a lot of work to make them habitable—which makes them cost even more. Today’s most affordable homes are still hard for the average American to afford, let alone the average first-time buyer who tends to put less money down in exchange for higher monthly payments. Rising prices and mortgage rates are pushing buyers who earn more than the median income to buy starter homes, and often pushing buyers who earn less money out of the market.”

Another challenge for first-time buyers: They’re often competing with all-cash offers for limited inventory of starter homes. More than one-third (36.5%) of the nation’s starter homes were purchased in cash in February, near the highest level in a decade. It’s likely that many of those homes sold to real estate investors, who are turning them into rentals and thus removing them from the stock of for-sale starter homes. Others likely sold to repeat homebuyers using equity from a previous sale.

Starter homes are more affordable than they were last fall

While the income required to buy a starter home is up from a year ago, it’s down 8% ($6,524) from last October’s all-time high of $82,373. That’s because mortgage rates have come down from their recent high. Mortgage rates are sitting around 6.8%, down from a two-decade high of 7.8% in October 2023. Affordability should continue improving throughout 2024 as mortgage rates gradually decline further.

There are also a few other encouraging signs for first-time buyers:

There are more starter homes to choose from. Active listings of starter homes rose 7% annually in February, the biggest increase in at least a decade. (The caveat is that the number of starter homes on the market fell to a record low in February 2023, which is part of the reason for the big year-over-year uptick.)
In some metros, first-time buyers are able to negotiate prices down or get concessions from sellers because high costs are pushing down homebuying demand.