This year was the least affordable year for homebuying in at least in the past 11 years, according to a Thursday report from real estate company Redfin.
In 2023, someone making the median income in the U.S. – $78,642 – would’ve had to spend more than 40% of their income on monthly housing costs if they bought the median-priced home, which was around $400,000, according to Redfin. That’s the highest share in Redfin’s records dating back to 2012, up nearly 3% from last year.
Monthly costs for homebuyers have increased more than twice as fast as wages, Redfin said. The 30-year fixed mortgage rate hit 8% in October, the first time since 2000, combined with a decrease in house listings on the market.
This past year, a typical homebuyer had to earn an income of at least $109,868 if they wanted to spend a maximum of 30% of their income on monthly housing payments for a median-priced home, Redfin reported – that record high is up 8.5% from last year and $30,000 more than the typical household income.
Austin was the only city that became more affordable in 2023, decreasing by around a 1% share, according to Redfin’s analysis. Meanwhile, the most expensive metros included many in California, like Anaheim, San Francisco and San Jose. People in those areas, Redfin added, were forced to rent in 2023 due to high housing costs.
On the other end of the spectrum, Midwest metros proved to be among the most affordable, with someone in Detroit making the median income only spending around 18% of their earnings on monthly housing costs.
Looking to 2024, Redfin predicts that mortgage rates will fall to about 6.6% and prices will drop 1% as new listings find their way onto the market.
“A perfect storm of inflation, high prices, soaring mortgage rates and low housing supply caused 2023 to go down as the least affordable year for housing in recent history,” Redfin Senior Economist Elijah de la Campa said in a statement. “The good news is that affordability is already improving heading into the new year.”