Survey finds that over 50% of prospective home buyers believe their income is insufficient to purchase a house
A recent survey conducted by Bankrate has revealed that more than half of prospective home buyers believe their income is insufficient to purchase a house. The survey, which included responses from nearly 2,300 adults, found that 54% of those interested in buying a home were held back by the fact that they did not make enough money.
The rising prices of homes and mortgage rates are major factors limiting affordability for potential buyers. In January, the typical price of a home in the U.S. was $379,100, a 5.1% increase from the previous year. According to a recent analysis by real-estate brokerage Redfin, with rates over 7%, a buyer would need to have an annual income of at least $115,000 to afford a home. This calculation assumes a 20% down payment and not exceeding 30% of their income on housing expenses.
Bankrate’s survey also highlighted that over half of aspiring home buyers (51%) cited the current cost of living as too high to afford a down payment and closing costs. Other reasons mentioned for not being able to buy a home included credit-card debt (18%), lack of financial assistance from friends or family (15%), and student-loan debt (10%). Mark Hamrick, a senior economic analyst at Bankrate, expressed that debt can be akin to quicksand, suffocating capability and potentially blocking the entry into one’s dream home.
Housing affordability is becoming increasingly challenging as the U.S. faces a shortage of homes for sale. Homeowners with historically low mortgage rates are hesitant to sell, exacerbating the problem. Furthermore, home prices are rising at a faster rate than wages, which Lawrence Yun, the chief economist at the National Association of Realtors, describes as an “unhealthy” trend. Yun attributes this trend to the housing shortage in America.
An additional concerning finding from the Bankrate survey is that 20% of aspiring homeowners believe they will never be able to save enough money to purchase a home. Older respondents expressed this sentiment more, with 36% of baby boomers and 28% of Gen X-ers admitting they do not believe they will ever save enough. Interestingly, boomers make up the largest share of home buyers at 39%, according to a report by the National Association of Realtors.
Overall, the survey conducted by Bankrate sheds light on the challenges faced by prospective home buyers in today’s market. High home prices, increasing mortgage rates, and a shortage of available homes are all contributing to the belief that income is insufficient to purchase a house. The rising cost of living, along with debt burdens such as credit-card debt and student loans, further compound the issue. As housing affordability continues to worsen, it is clear that potential buyers are facing significant obstacles in achieving their dream of homeownership.
