The Rising Cost of Homeownership

In April, the national median listing price for a home reached $431,250, requiring potential buyers to earn at least $114,000 annually to afford it, as per Realtor.com's latest data. This calculation is based on a 20% down payment, a 30-year fixed-rate mortgage, and the guideline that housing costs should not exceed 30% of gross monthly income.

A Steep Climb Over Six Years

Compared to six years ago, when the median home price was $314,950 and mortgage rates averaged 4.1%, today's buyers need an additional $47,000 in annual income. With current mortgage rates at 6.76%, the financial barrier to homeownership has significantly increased.

Metro Areas Where Six Figures Aren't Enough

In high-cost areas like San Francisco, Los Angeles, New York, and Boston, the income needed to afford a median-priced home exceeds $200,000, with San Jose topping the list at over $370,000.

The Pandemic's Impact on Housing

The pandemic era's low mortgage rates led to a frenzied market, with prices soaring over 50% from 2019 to 2024. However, the market has since cooled, with sales reaching nearly 30-year lows in 2023.

A Silver Lining for Buyers

Despite challenges, there's hope. Price growth has slowed, and inventory is up, with active listings surging by 30.6% year-over-year. Additionally, more sellers are reducing prices, offering opportunities for prepared buyers.

"The market is starting to rebalance, creating opportunities for buyers who are prepared," says Danielle Hale, chief economist at Realtor.com.