Homebuyers Need an Average of 34% More Income to Qualify in 2022

U.S. homebuyers need to earn $76,414 per year to afford a typical monthly mortgage payment today — up $19,478 from one year ago, according to a new report from Redfin.

That’s an increase of 34.2% year over year as low supply, torrid demand and (more recently) rapidly increasing mortgage rates have pushed home-sales prices up and affordability down. Per Redfin data, the typical monthly mortgage payment in March reached $1,910, up from $1,423 in March 2021 and up from $1,280 in March 2020.

Meanwhile, average hourly wages rose by only 5.6% over the past year, contributing to the affordability crunch.

“Housing is significantly less affordable than it was a year ago because the surge in housing costs has far outpaced the increase in wages, meaning many Americans are now priced out of homeownership,” Redfin deputy chief economist Taylor Marr said.

In all 50 of the largest metro areas tracked by Redfin, the income necessary to afford a home increased by more than 15% year over year, although the actual gain varied widely from city to city. For example, in Pittsburgh (which saw the smallest annualized gain among evaluated metros), homebuyers needed an income of $39,532 to afford the area’s median monthly mortgage payment ($988). This income threshold was up 16.3% from one year ago.

Other cities with threshold increases nearest to the low end of the spectrum included Philadelphia (17.1%), Chicago (18.2%), Milwaukee (20.4%) and Detroit (21.3%).

The largest jump in income threshold was seen in Tampa, which saw a whopping increase of 47.8% (the current income required is $67,353, an increase of $21,791 since March 2021). The typical monthly mortgage payment in the city rose to $1,684. Other cities with large year-over-year increases included Phoenix (up 45.7%) and Las Vegas (up 45.6%). Other metros with increases of 40% or more included Orlando, Jacksonville, Nashville and Austin.