The income required to afford a starter home across the nation has risen significantly since 2019.
According to an analysis from Realtor.com, the household income now required to afford the typical starter home in the United States is $70,164, up more than 100 percent from just $32,357 in 2019. In Massachusetts, the increase is similarly great as the typical starter home costs $562,560 which is an increase of 58 percent percent in the five-year time span.
In Connecticut, starter home prices nearly doubled since 2019 as the typical starter home cost $390,090, an increase of 48 percent
“Though home price growth has contributed significantly to declining affordability, mortgage rate growth has exacerbated the issue,” Realtor.com senior economic research analyst Hannah Jones said in a statement. “While starter home prices climbed 53.7% over the last five years, payments more than doubled due to mortgage rates increasing from roughly 4% to almost 7%.”
In order to keep mortgage payments within 30 percent of household income, a Massachusetts resident would need to make $134,768 with current mortgage rates sitting at nearly 7 percent. In Connecticut, the required income is just below $100,000, sitting at $93,430.
The change in the monthly payment required to afford they median-priced starter home is even greater. The monthly payment for a median-priced starter home in Massachusetts would be $3,368 when accounting for current mortgage rates and assuming a 10 percent down payment. This is an increase of 123 percent since 2019.
In Connecticut, the increase in monthly payments is greater than 100 percent as the monthly payment for the median starter homes in the Nutmeg State sits at 2,336, a 109 percent increase since 2019. The estimated payment for 2019 assumes a 3.9 percent mortgage rate and 10 percent down.
Massachusetts’ neighbors to the north actually saw the greatest increase across the nation. Monthly home payments on the median-priced starter home in New Hampshire has risen 164 percent since 2019. The monthly mortgage payment for the typical starter home in New Hampshire is now $2,600, which would require an income of $103,985 to be considered affordable.