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First-Time Home Buyer Metro Affordability Report – Q2 2022 – NerdWallet

After two long years of home sellers calling all of the shots, home buyers are eager for the housing market to tilt in their favor. But modest improvements in the number of home listings and tempered demand d…….

After two long years of home sellers calling all of the shots, home buyers are eager for the housing market to tilt in their favor. But modest improvements in the number of home listings and tempered demand due to higher mortgage rates aren’t likely to put all the power in buyers’ hands anytime soon.

Home affordability hit another low for first-time buyers in the second quarter of the year, according to the most recent analysis of the nation’s largest metropolitan areas. Though there were more listings on the market, on average, the combination of climbing list prices and stagnant wages means many buyers would struggle to afford them.

Mortgage rates hit 5% in April and have hardly dipped lower since, so some would-be buyers have decided to sit it out now that the interest on their home loan would cost more. Ultimately, slowed demand will affect list prices, but in the second quarter, they weren’t yet responding.

Affordability double whammy: Price growth and falling wages

Average asking prices crept higher again in the second quarter. Paired with wages that aren’t keeping up with inflation, homes became less affordable.

A long-held rule of thumb is that home shoppers should look at properties priced roughly three times their income. That has become near-impossible for many people.

Homes were listed at 6.5 times the typical first-time home buyer income in the second quarter across the most populous 50 U.S. metros, and 6.6 times their income across the nation. Both of these top the highest rates we’ve seen in the two-year duration of this analysis, previously bested in the first quarter of 2022.

Pittsburgh remains the most affordable metro area for first-time buyers. Homes there were listed at 3.3 times the typical first-time buyer income, a modest increase over the past two quarters. Other most affordable metros in the second quarter included: Cleveland(3.6), Buffalo (3.9), St. Louis (3.9) and Baltimore (4.2).

Always the priciest place for first-timers to buy, homes in Los Angeles were listed at 12.5 first-time buyer income in the second quarter. The other least affordable metros of the second quarter included: San Diego (10.8), San Jose (10.3), Miami (9.9) and Sacramento (8.8).</…….

Source: https://www.nerdwallet.com/article/mortgages/fthb-affordability-q22022

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