Home prices are so high that nearly half of would-be home buyers say they earn too little to afford a house, according to a new survey.
The survey, by Bankrate, included responses from nearly 2,300 adults, 864 of whom were aspiring homeowners. It found that 54% of respondents who were interested in buying were held back by the fact that they did not make enough.
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.