Half of aspiring home buyers say they earn too little to afford a house: survey

Rising home prices and mortgage rates are limiting how much home buyers can afford. The typical price of a home in the U.S. was $379,100 in January, up 5.1% from the same time a year earlier.

With rates over 7%, the typical home buyer would need to make at least $115,000 to afford a home, according to a recent analysis by the real-estate brokerage Redfin. That calculation assumes that a buyer is putting 20% down and is not spending more than 30% of their income on housing.

More than half of aspiring buyers (51%) also noted that the current cost of living was too high for them to afford a down payment and closing costs, Bankrate noted.

Other reasons cited for not being able to buy included owing credit-card debt (18%), not having friends or family to provide financial assistance (15%), and owing student-loan debt (10%).

“For prospective home buyers, debt can be the financial equivalent of quicksand suffocating capability and potentially blocking entry over the threshold of a dream home,” Mark Hamrick, a senior economic analyst at Bankrate, said in a statement.

Housing affordability is also worsening. The U.S. continues to face a shortage of homes for sale as homeowners with rock-bottom rates hesitate to sell.

Home prices are also growing faster than wages, an “unhealthy” trend, Lawrence Yun, the chief economist at the National Association of Realtors, said on a call with reporters discussing the report on January existing-home sales. 

“We don’t want to see it,” he added. “It is a testament to the housing shortage we are facing in America.” 

Additionally, 20% of aspiring homeowners in the Bankrate survey said they would never be able to save enough to purchase a home, with higher shares of older respondents expressing that sentiment. Thirty-six percent of baby boomers said they would never be able to save enough to buy a home, as did 28% of Gen X-ers. 

That’s despite the fact that boomers make up the biggest share of home buyers, at 39%, compared with other generations, according to a 2023 report by the NAR. 

From the archives (November 2023): Housing affordability hits a 39-year low. ‘It’s fair to expect prices to weaken,’ expert says.