Buying starter homes is cheaper than it was last year, and you can thank mortgage rates for that. But while starter home prices themselves are more expensive than a year ago, the income needed to afford them fell when mortgage rates did, according to Redfin.
For monthly payments on a starter home with a median price of $250,000, would-be homebuyers need to earn $76,995 a year. That’s 0.4% lower than a year ago and happens to be the first annual decline in about four years, the analysis read. In anticipation of an interest rate cut from the Federal Reserve, mortgage rates dropped this summer. The average 30-year fixed rate fell to 6.5% in August from 7.07% a year earlier, Redfin said. It’s fallen even further, with the latest weekly reading coming in at 6.08%.
“It’s great news that starter homes are becoming a little more affordable, but there’s a catch,” Redfin Senior Economist Elijah de la Campa said in the analysis. “Starter homes aren’t what they used to be. A decade ago, a turnkey four-bedroom house in a nice neighborhood was often considered a starter home, but today, a small fixer-upper condo is often all a first-time homebuyer can afford. The American Dream is changing; for many, it no longer involves a house and a white picket fence.”
fortune.com/2024/09/30/starter-homes-prices-affordability-incomes-mortgage-rates/
- Only 2.5% of U.S. homes changed hands in the first eight months of 2024.
- The rate of home sales and home listings are both down at least 30% from 2019.
- California metros lead the list of areas with the lowest turnover, while Sun Belt and New York commuter metros posted highest turnovers. Just 25 out of every 1,000 U.S. homes changed hands in the first eight months of 2024, the lowest turnover rate in decades.
www.redfin.com/news/home-sales-turnover-2024/
A global housing crisis is suffocating the middle class
Prices have risen by 54% in the United States, 32% in China and nearly 15% in the European Union between 2015 and 2024. Though policies have been implemented to increase supply and regulate rentals, their impact has been limited and the problem is getting worse