High house prices are caused by Inventory is scarce That means the median buyer’s income has hit six figures for the second time, and down payments are at their highest levels in decades, according to a report from the National Association of Realtors.
The organization’s Home Buyer and Seller Profile found that median income in 2022 will be $107,000, a record high. This figure is $19,000 higher than the $88,000 in last year’s report (using 2021 data).
But for first-time homebuyers, the increase was even greater, nearly $25,000 more than the previous year, NAR deputy chief economist Jessica Lautz said in a news release.
The median household income for first-time homebuyers in 2022 is $95,900, up from $71,000. For repeat homebuyers, the median income is $111,700, compared with $96,000 a year ago.
This is a result of high house prices, which is one reason why mortgage payments are rising. First American Data and Analysis reported that home prices rose 0.4% from September to October and rose 7% year-on-year in October.
“October’s preliminary sales prices continue to indicate that insufficient supply is limiting the market beyond affordability, which again hit a record low last month,” First American chief economist Mark Fleming said in a news release. You can’t buy what’s not for sale, and even if you can afford it with an 8% mortgage, it’s no surprise that house prices continue to rise for the seventh month in a row. “
Mortgage Bankers Association Purchase requisition payment index in SeptemberDespite the month-over-month decrease, the price is still $2,155 for recent home buyers. In the same month of 2022, the price was $1,941.
“In a still-competitive real estate market, more affluent homebuyers are able to accept their offers by offering larger down payments or even paying cash,” Lautz said.
The other time the median income for all buyers exceeded $100,000 was in 2020, though for repeat buyers, the median income has exceeded that every year except 2021 since 2017 level.
The report also covers activity from July 2022 to June 2023.
During the study period, first-time homebuyers accounted for 32% of the market, which is higher than the low of 26% in 2022; it is still lower than 1981 and higher than the historical average of 38%.
The typical down payment for a first-time home buyer is 8%, the highest level since 1997. For repeat homebuyers, the typical down payment is 19%, the highest level since 2005.
“First-time homebuyers are cautiously returning to the market this year, with less competition and Reduce multiple quotes Lautz explained. “While the share of first-time buyers remains near historic lows, it is higher than last year.”
Meanwhile, 80% of buyers financed the transaction, an increase of two percentage points from the 2022 survey but down from 87% in 2021, when mortgage rates is 2.98%more than 4 percentage points than todayaccording to Freddie Mac.
“Homebuyers have become more racially and ethnically diverse over the past year, with increases in the number of minority homebuyers, homebuyers born outside the United States, and homebuyers born outside the United States. Primary language is not English“This is an encouraging sign that homeownership rates may narrow in the future as more minority buyers enter the market,” Lautz said. “
Still, 81% of buyers were white, compared with 88% a year ago. Another 7% are Hispanic, 7% are Black, and 6% are Asian/Pacific Islander.
The share of buyers from outside the United States increased two percentage points to 10%, while 6% spoke a primary language other than English, up one percentage point. After the Sitzer/Burnett verdictNAR claims that the share of buyers and sellers using a real estate agent or agent has increased by three percentage points, to 89% in each category. Additionally, 90% of buyers said they would use the agent again or recommend them to others.
“Buyers want experts to help them find and negotiate the right home,” Lautz said. “Sellers also rely on real estate agents and brokers to competitively price their homes and market them to potential buyers.”
But some in the mortgage industry are worried about the verdict and/or related legal settlement may have unintended consequences For buyers, that includes qualifying for a loan.