Median household income not cutting it for first-time home buyers
For new homebuyers, the median household income doesn't seem to cut it.
The average first-time homebuyer earns about $72,500, which is higher than the country's overall median household income of $60,700, according to Zillow. The drop is even greater for peers of new homeowners that didn't buy a house, as their median income sits at just $42,500.
The $30,000 gap between new purchasers and their counterparts who didn't buy highlights affordability challenges in the current housing climate, brought on by tight supply pushing up property values and simultaneously rising mortgage rates.
Home purchasers rely on savings, for the most part, to afford a down payment, but proceeds from the sale of a previous home is the second-most tapped method, and it's one that first-time purchasers can't exhaust.
The typical first-time homebuyer puts down 14.5% for a home purchase, compared to 20% for the majority of repeat buyers. With this lower down payment amount, first-timers earning the median household income can afford to buy a house worth $338,000, meaning 32% of homes on the market are out of reach to them, according to a RealEstate.com report.
At 83.7%, first-time homebuyers can afford the largest share of homes in St. Louis. The opposite is true for Los Angeles, where purchasers buying a house for the first time can only afford 25.4% of homes.
"Buying a home, especially for the first time, is a major step in a lot of people's lives. But with home prices climbing ever higher, and inventory yet to see sustained increases, getting a foot in the door is incredibly difficult for new buyers who can't rely on selling another home to come up with a down payment," Justin LaJoie, general manager at RealEstate.com, said in a press release.