Is an income of over $100,000 necessary for purchasing a home? Increasingly, the answer appears to be yes. According to a recent analysis by NBC News of U.S. Census Bureau data, the median income of new homebuyers has risen significantly in the aftermath of the Covid pandemic, exceeding six figures. This trend is seen as a sign of economic strain, highlighting the current exclusivity of the housing market where even those with a substantial salary may face challenges in buying a home.
In 2023, new households entering the housing market had a median income of $110,000, with those aged 40 and under earning around $114,000. Notably, younger generations are outpacing existing homeowners in terms of income levels. Chen Zhao, head of economic research at Redfin, pointed out that although Gen Z workers are earning more than previous cohorts at a similar age, they are still finding it difficult to break into homeownership.
The shift towards higher income requirements for homeownership reflects a broader trend in the housing market. Today’s homebuyers are expected not only to have good credit and a down payment but also to be among the top earners in the country. In comparison, the national median income stands at approximately $81,000, while renters have a median income of $62,000.
This rise in incomes can contribute to inflation, with prices following suit, potentially setting off a cycle of inflationary pressure. Furthermore, the impact extends beyond economic concerns, shaping communities as those unable to afford homes become a growing segment of renters, altering neighborhood dynamics.
In regions like Oregon, where new homebuyers reported incomes exceeding $120,000 in 2023, challenges abound. In counties such as Lincoln, home prices have surged nearly twofold since the pandemic, while competition remains intense in places like Josephine County, maintaining near-maximum levels on the NBC News Home Buyer Competition Index for almost a year.
For individuals like Ryan Holley, the path to homeownership has become increasingly elusive. Despite significant income growth, Holley has faced obstacles in securing a new home, particularly in markets like Las Vegas where high mortgage rates and soaring property prices present hurdles.
The experience of the Clarks, a dual-income household near Portland, sheds light on the arduous journey many face in today’s housing market. After a prolonged search, they finally purchased a home in 2023, illustrating that even with a combined income of around $120,000, the road to homeownership can be a challenging one.
” ‘The seller refused to negotiate on repairs,’ Katrina said. She explained that with mortgage rates above 8%, the Clarks required a rate buydown, which involved paying extra upfront for a temporarily reduced interest rate to manage monthly costs. Katrina likened the process of house hunting to a second full-time job, noting the emotional toll it took on her, saying, ‘No one’s ever told me it’s this thing you cry all the time about.’
In terms of methodology, NBC News utilized the Census Bureau’s 2023 American Community Survey Public Use Microdata Sample to identify households that had recently moved into owner-occupied homes, where the householder is a civilian in the labor force. For generating metro-level statistics related to household income, NBC News calculated weighted averages for each metropolitan area with more than 1,000 new homeowner households.”
