Mortgage Payments Have Increased A Staggering 50% From One Year Ago

House affordability for the majority of first-time homebuyers has been shattered by stubbornly high prices and mortgage rates that have hit 22-year highs.

The median income required to buy a normal home has increased to $88,300, according to the National Association of Realtors (NAR). This is approximately $40,000 more than it was in 2020 before the pandemic began.

Additionally, the typical existing single-family home's monthly mortgage payment with a 20% down payment was $1,840.

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This is an enormous boost of $614, or 50%, from one year ago, and a slight increase over the second quarter of this year ($1,837).

What does this mean for American homebuyers?

According to NAR, a large number of Americans who are priced out of home ownership due to sky-high inflation are now becoming renters, which prevents them from amassing wealth. In 75% of the largest metro regions in America, renting is still less expensive than owning a starter home, despite rental prices reaching new highs.

For those who are currently priced out of the market, investing as little as $100 in rental properties can help you create wealth and generate a passive income.

When will prices go back to normal?

As the economy navigates this period of uncertainty, several industry insiders in the housing industry caution purchasers against trying to time the market.

There are conflicting indications as to whether the housing market will collapse, or if it will merely correct, as some analysts claim, from the double-digit percentage increases observed in home prices over the past year.

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“We’re estimating about a 5% drop nationally,” says Rick Sharga, executive vice president of market intelligence at ATTOM Data. “Some markets, believe it or not, will probably see prices continue to increase.”

Other analysts agree, saying the likelihood of a housing market collapse is low because homeowners today have more stable financial foundations than individuals who were homeowners during the financial crisis of 2008.

To read about the latest developments in the industry, check out Benzinga's real estate home page.