What It Takes to Afford Your First Home

Americans once needed $40,500 annually to snag a starter home, but today it's a steep climb at $76,000, says Redfin.  The pandemic's impact on the housing market has redefined what qualifies as a starter home, with prices skyrocketing and mortgage rates following suit.

"The pandemic housing-market boom changed the definition of a starter home," says Redfin Senior Economist Elijah de la Campa. "A decade ago, many people thought of a starter home as a small three-bedroom single-family house. Now that type of home could cost seven figures, especially in expensive parts of the country."

As of Thursday, rates for a conventional 30-year loan stood at 6.87%, while the median home price as of February was $384,000, according to the National Association of Realtors. With affordable homes dwindling and all-cash offers becoming more prevalent, first-time buyers face fierce competition in the market.

In some cities like San Jose, residents need an annual income of roughly $319,000 to afford a home, while in Detroit, earnings of $22,000 suffice. The landscape of affordability varies widely across the U.S., challenging aspiring homeowners to navigate their options wisely.

With starter home prices skyrocketing, it's essential to strategize your approach to affordability. 💰💡 Whether you're saving for a down payment or exploring financing options, there are steps you can take to achieve your homeownership goals.

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