The Cost of Homeownership in the U.S. Has Doubled in Four Years

The cost of homeownership in the U.S. has skyrocketed in recent years, with Americans now needing to earn at least $76,000 a year to afford a basic home, according to a report from Redfin. Just four years ago, the recommended income for becoming a homeowner was $40,500, highlighting the rapid increase in housing costs.

Redfin’s Senior Economist noted that the pandemic housing market boom has redefined what a starter home looks like, with many traditional starter homes now costing seven figures in expensive parts of the country. The typical starter home now sells for $240,000, up 3.4% from the previous year, making it even more challenging for first-time buyers to enter the market.

The high cost of housing is further exacerbated by rising mortgage rates, which currently stand at 6.87% for a conventional 30-year loan. With affordable homes in low supply and a growing number of all-cash offers flooding the market, first-time buyers are facing stiff competition and financial barriers.

While some cities are more affordable than others, the average American must earn around $106,500 to comfortably afford a typical home, according to research from Zillow. With housing affordability becoming increasingly out of reach for many Americans, the real estate market may see shifts in the future to address these growing challenges.