What First Time Home Buyers Should be Concerned With?

Posted by Carolyn Lynch on July 14th, 2022

Monthly mortgage payments for U.S. homes with the median price rose by more than 0 for potential buyers over the last year. For the median-priced home, the income requirement for being able to afford payments was 7,500 in the JCHS report, nearly ,000 more than the year before. In the process, 4 million renter households were able to afford a home at the median price.

Alexander Hermann, a senior research analyst at the JCHS, says a first-time buyer needs ,400 as a down payment on a median-priced home at today's prices. The median savings of renters are just ,500, and without family support, 92% will be excluded from homeownership.

Ongoing Affordability Challenges

In the early stages of the pandemic, job losses and income losses made many households less affordable. According to the Census Bureau, households nationwide paid over a third of their income for housing in 2020, up 1.5 percentage points from 2019. An increase of 2.6 percentage points was seen among renters, compared with a one percentage point rise among homeowners. An increase of 2.4 percentage points was seen among Black households. However, JCHS found that although households making less than ,000 had the highest costs-burdened rate, those making between ,000 and ,000 saw the most significant increase in shares, rising 4.2 percentage points.

JCHS reports evictions have increased significantly since 2022, following the end of government protection during the pandemic. In March, there were 61,300 applications, 2.5% fewer than during the same period in 2012-2016. According to the report, evictions had returned to historic levels in more than half of the cities monitored.

Growing Housing Inequality

Home prices have been rising so rapidly that the wealth gap between homeowners and renters has grown, according to the JCHS. A homeowner's median wealth in 2019, by comparison, was 4,900, about forty times the median wealth of a renter's household. The report noted that many Black and Hispanic families fell short of equity gains as home prices appreciated because of their low homeownership rates. According to the JCHS, disparities also exist among homeowners by race and ethnicity: Compared with white homeowners (9,000), Black homeowners had a median net wealth of just over a third (3,100), while Hispanic homeowners had a median net wealth of roughly half (4,800).

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