It’s no secret that home prices in the Greater Boston area have skyrocketed over the past few years. exponentially worse during a pandemic.
But the results of a new study on how much money you need to make to buy a home locally these days may still shock you.
New U.S. Housing Status Report The Joint Center for Housing Research at Harvard University found that you need to earn over $181,000 a year to afford a mid-priced home in the Greater Boston area.
The estimate assumes a 3.5% down payment on a 30-year fixed-rate mortgage and that buyers will spend no more than 31% of their income on mortgage payments. He also values the house for an average price of $659,161.
The report comes after a year of explosive house prices. According to National Association of Realtorsin the first fiscal quarter of 2022, house prices in the country rose by almost 16% year on year.
In Massachusetts WBUR reported, house price increases were still extreme, but not as dramatic. House prices in the state are reported to have risen nearly 10% year-on-year in April 2022.
“If you are a homeowner, you just won the lottery. And if not, then you just got locked out for a long time,” said Chris Herbert, managing director of the Harvard United Center for Housing Research. boston globe Wednesday.
Things could get worse for homebuyers as the Federal Reserve raises interest rates. According to New York Times, average mortgage rates have already jumped two percentage points since the Fed raised interest rates earlier this month. This is a huge contrast to the very low mortgage rates that even last year hovered around 3%.
“The change in mortgage rates is really multiplying the impact of price increases on affordability that happened during the pandemic,” said Jeff Tucker, senior economist at housing website Zillow. the globe.
“All this has led to an absolutely incredible increase in the cost of home ownership. The monthly cost of a mortgage payment has risen astronomically over the past year when you factor in this combination of higher prices and higher interest rates.”
In Greater Boston, white households are twice as likely to own their home as blacks and Hispanics, according to a Harvard report. As a result, the exponential rise in house prices exacerbates the racial wealth gap.
Homebuyers looking to take advantage of record low interest rates have been a major driver of unrealistic demand for homes since the start of the pandemic, which Tucker told the globe “allowed a lot of people to kind of make the numbers work, even buying houses they would have previously considered prohibitively expensive.”
Home prices could fall as more buyers are squeezed out of the market by rising mortgage rates. the globe reported, but experts say that the supply of houses in our area is still low, as it has been for many years.
Experts expect what will happen in the home buying market in the next few months, when higher mortgage rates come into effect.