In the midst of her home search in Saint Johns, Florida, Aimee Wiles-Banion is finding out just how difficult it is. With mortgage interest rates inching up to 8% and limited inventory, Wiles-Banion is struggling to find a home she can afford, especially on her teacher’s salary of under $50,000.
“It’s been a big emotional roller coaster,” said Wiles-Banion, 53.
As home prices and interest rates continue to rise, the cost of a home is now more expensive than ever for Americans.
According to a study this month from Redfin, a homebuyer must make $114,627 to afford a median-priced home in the United States. That figure is up 15%, or $15,285, from a year ago, and up more than 50% since the start of the pandemic. It is currently the highest on record.
The typical U.S. home sold for about $420,000 in August, up 3% compared to August of 2022, according to the study.
The income needed to buy a median-priced home in America is about $40,000 more than the median household income in the U.S. According to theU.S. Census, the median household income was about $75,000 in 2022, the most recent year for which data is available.
The analysis from Redfin compares data on median mortgage payments for homebuyers in August of 2023 and August of 2022. The study shows that the typical U.S. homebuyer’s monthly mortgage payment is now $2,866, up 20% from $2,395 last year.
Wiles-Banion is in the midst of trying to sell her single-family home in St. Augustine, Florida, for $250,000 to move closer to her job in Saint Johns, where the median list price is just under $500,000. To be able to afford the move, Wiles-Banion is looking at a new-build townhouse in the $300,000 range, swapping out the single-family home she currently lives in.
More buyers getting cold feet as home costs rise
Some buyers are backing out of deals when they see their high rate on paper alongside extra expenses for maintenance, repairs and closing costs.
The builder is offering incentives such as new appliances and help with closing costs as well as a lower-than-market mortgage interest rate of 5.9%. Still, Wiles-Banion estimates that her home payment will double from $1,100, as she currently has a 4% interest rate from 10 years ago when she purchased her St. Augustine home.
To make up for the increased expenses, Wiles-Banion plans to work more at her second job as an artist selling her works in jewelry and home decor at High Tide Gallery in St. Augustine. She also plans to take in a roommate.
Wiles-Banion’s current payment is on par with the median before the pandemic. The typical monthly house payment in August 2020, was $1,581, with an average interest rate of just below 3%, according to Redfin. A homebuyer could earn $75,000 per year to afford the typical home then.
