Mortgage rates are roughly 2.5% higher than the average 3.2% rate posted during the first week of the year, meaning that buyers need to spend an extra $800 each month to purchase a median-priced home. Even as inventory levels rise across the U.S., the majority of available homes for sale are affordable only for higher-income buyers. In a widening affordability crisis, lower-income buyers are being left behind.
According to the National Association of Realtors, buyers with an income of $50,000 can afford just 14% of all listings, while those on the upper end of the market earning $500,000 annually can afford 93% of all homes available.
Since all real estate is local, the impact of rising mortgage rates is even larger in some areas. Even though inventory is improving in these areas, middle- and lower-income buyers can afford to buy fewer homes. For example, housing inventory has significantly improved in the Portland, OR metro area (an 83% increase) since January. However, there are about 40% fewer homes that buyers earning $75,000 can afford to buy now compared to January. In contrast, there are about 70% more listings that buyers earning $200,000 can afford to buy now compared to January in the Portland metro area.
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