By Matt Durr
mlive.com
(TNS)
The cost of housing continues to far outpace the earnings of average Americans according to data released by national real estate firm Redfin. The study found that Americans need to earn $109,796 in order to afford a typical home for sale in the U.S.
For many Americans, that means housing remains unaffordable as the median household income is $87,599, creating a gap of $22,197.
However, the study also found that the gap is shrinking. A year ago, the gap stood at $26,125, and two years ago it was $28,834.
“The earnings needed to buy a house have stabilized after several years of deterioration, but that doesn’t mean homes are affordable to the average American,” said Yingqi Xu, senior economist at Redfin. “There’s still a double-digit gap between what the typical household earns and what they need to comfortably buy a home, leaving many prospective first-time buyers stalled on the sidelines.”
For first-time buyers, Americans need to earn $70,693 to afford the typical entry-level home.
Redfin found that average homebuyers need to spend 37.6% of their income to buy the median-priced home, down from 39.3% last year. In the month of June, roughly one-third of U.S. home listings were affordable to someone earning the median income.
That income gap varies greatly depending on where homebuyers are looking to purchase. Only three major metropolitan areas—Indianapolis, Pittsburgh and St. Louis—have median incomes that exceed what’s needed to afford to buy a home.
In Pittsburgh’s case, that might be changing as it saw the largest decrease in affordability, with its required income jumping 6.3% to $82,816.
Other major areas that saw big jumps include San Francisco, where the number jumped by 6.2% to $453,205, the most expensive in the nation. West Palm Beach, Florida finished third with an increase of 5.6% to $146,404.
Photo credit: magnific/Freepik
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Tags: home sales, housing, income, Payroll, salary
