Many companies featured on Money advertise with us. Opinions are our own, but compensation and
in-depth research may determine where and how companies appear. Learn more about how we make money.

Editor:
Published: Nov 15, 2022 3 min read
Photo Illustration of a toy house on top of stack of dollar bills
Money; Getty Images

Homebuyers today need to earn a lot more money than they used to in order to afford a new place to live.

To afford the $2,682 monthly mortgage payment on a typically priced U.S. home, the real estate brokerage Redfin finds that a prospective homebuyer needs to earn at least $107,281 a year. Redfin considers a mortgage payment to be affordable if it accounts for 30% or less of a homebuyer’s annual income.

That $107,000 threshold represents a jump of more than 45% from last year, when a homebuyer only needed to earn $73,668 to afford a typically priced home.

The main culprit? Mortgage rates, which soared above 7% this fall. On top of that, home prices are still rising, albeit at a slower rate than at the beginning of the year.

Of course, buyers in pricey cities need to have a lot more cash, and some cities have seen much larger increases in the income necessary for buying a home. The biggest jump from last year was in North Port, Florida, where a homebuyer needed an annual income of at least $131,535 to afford a median-priced home in October. A year earlier, they only needed $75,659.

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Want to buy a home this year? AmeriSave Mortgage can help
Lock in a Mortgage Rate before you start shopping. AmeriSave Mortgage can make it possible. Click on your state today to find the rate that’s right for you.
HawaiiAlaskaFloridaSouth CarolinaGeorgiaAlabamaNorth CarolinaTennesseeRIRhode IslandCTConnecticutMAMassachusettsMaineNHNew HampshireVTVermontNew YorkNJNew JerseyDEDelawareMDMarylandWest VirginiaOhioMichiganArizonaNevadaUtahColoradoNew MexicoSouth DakotaIowaIndianaIllinoisMinnesotaWisconsinMissouriLouisianaVirginiaDCWashington DCIdahoCaliforniaNorth DakotaWashingtonOregonMontanaWyomingNebraskaKansasOklahomaPennsylvaniaKentuckyMississippiArkansasTexas
View Rates
Not all products are eligible. All loans are subject to credit approval. Additional terms & conditions apply.

What’s next for the housing market

“The housing market is resetting,” Realtor.com chief economist Danielle Hale wrote in a blog post last week, “but in a slow fashion.” Hale pointed to growing inventory, slowing price growth and the fact that homes are spending more time on the market than they did a year ago.

That’s not to mention the fact that daily mortgage rates tumbled more than half a percentage point last week on the heels of better-than-expected inflation data. But would-be buyers shouldn’t celebrate too much just yet.

Homes are still selling quickly compared to the pre-pandemic market, and there’s no guarantee that rates will keep falling. “All those factors that are propping up mortgage rates are still going to be in the ether,” Lisa Sturtevant, chief economist at Bright MLS, previously told Money.

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Take the first step to becoming a homeowner today
Get a Mortgage Rate that works for you. AmeriSave Mortgage can help you get started with just a few clicks. Get started now by clicking below.
View Rates
Not all products are eligible. All loans are subject to credit approval. Additional terms & conditions apply.

More from Money:

Home Sellers Are Most Likely to Cut List Prices on This Day of the Week

The 50 Best Places to Live in the U.S. | 2022—2023

What Mortgage Rates Soaring Past 7% Means for Buyers, Sellers and the Housing Market