Bloomberg recently reported that annual income of $114,000 is now required to purchase the average home in the U.S. assuming a sales price of $412,000, a 20% down payment, and a 7.2% mortgage rate. As shown below, the comparable income requirement just ten years ago was $46,236!
This environment is very daunting for prospective homeowners and the situation is actually much more extreme in areas such as New York and the Bay Area of California where the median home prices are $725,000 and $1,000,000, respectively. In reality, the overall national challenge is even greater today than when this chart was created just a few weeks ago because the most recent surge in interest rates has pushed the average 30 year fixed mortgage rate to 7.95%.