Home Fixed interest Study Says Buyers Need 40% More Income To Afford D-FW Homes Than Last Year

Study Says Buyers Need 40% More Income To Afford D-FW Homes Than Last Year

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Texas Compression: A series examining the high cost of high growth in North Texas.

With soaring house prices and mortgage rates, a recent study by Redfin says Dallas-Fort Worth homebuyers need to earn 40% more income than last year to pay monthly mortgage payments.

Dallas-area buyers needed to earn an annual income of $77,768 to pay monthly payments on the median home of $420,000 in March, according to Redfin. That’s 39.5%, or $22,027, more than the company said it needed to buy a home at the median price in March 2021.

In the Fort Worth area, buyers needed to make $65,117 to afford the median home of $352,000 — up 40.3%, or $18,665, more than a year ago, Redfin found.

Meanwhile, Dallas-Fort Worth wages weren’t even close to a 40% increase. Workers earned just 4.5% more in March than a year earlier, according to the US Bureau of Labor Statistics.

Redfin considers monthly mortgage payments to be affordable if a homeowner spends no more than 30% of their income on housing. His report assumes buyers have paid a 5% deposit and calculations exclude taxes and insurance.

The median home price has risen 22% since March 2021 in the Dallas area, pushing monthly payments from $1,394 to $1,944. In the Fort Worth area, the median home price rose 22.6%, with monthly payments rising from $1,161 to $1,629.

Sun Belt cities have seen the most dramatic changes in housing affordability as costs soar due to high demand from people moving out of town, Redfin’s Dana Anderson wrote in the report.

“Buyers are attracted to Sun Belt communities in part because they are relatively affordable compared to expensive coastal job centers, but the resulting rise in home prices could make them less popular in the future” , Anderson wrote.

Another report from Texas A&M University’s Texas Real Estate Research Center said the income needed to buy a $229,000 home — the price the center has determined is affordable for first-time buyers — has increased by $10,000 since then. the beginning of the year due to a higher mortgage. rates.

The average 30-year fixed-rate mortgage rate was 5.09% as of June 2, down slightly from previous weeks but still significantly higher than the 2.99% rate seen a year ago.

“As mortgage interest rates rise, so does the total monthly mortgage payment,” said Clare Losey, associate research economist at Texas A&M. “It increases the income required to qualify for a mortgage. In other words, as mortgage interest rates rise, purchasing power declines and households have to earn more money to buy the same house at the same price.

Higher homeownership costs are beginning to affect sales activity, with home viewing appointments down 9% year-over-year in April. Economists expect house price growth to slow this year, but demand remains high as supply has fallen significantly in recent years.