2023 was the cheapest year to buy a home: Redfin

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A Redfin sign in front of a home for sale in Atlanta on November 10, 2022.

Novelage Elijah | Bloomberg | Getty Images

This year was the cheapest year to buy a home in at least the last 11 years, according to a report Thursday from real estate firm Redfin.

In 2023, someone making the median income in the US – $78,642 – would have to spend more than 40% of their income on monthly housing costs if they bought the median-priced home , which was around $400,000, according to Redfin. That’s the highest share in Redfin’s records going back to 2012, up nearly 3% on last year.

Monthly expenses for homebuyers have risen more than twice as fast as wages, Redfin said. The 30-year fixed mortgage rate hit 8% in October, the first time since 2000, along with a decrease in home listings on the market.

This year, the average homebuyer had to earn an income of at least $109,868 if they wanted to spend up to 30% of their income on monthly housing payments for an affordable home medium, Redfin said. That top rate is up 8.5% from last year and $30,000 more than the average household income.

Austin, Texas, was the only city that became more affordable in 2023, decreasing about 1% share, according to the Redfin study. Meanwhile, the most expensive metros included many in California, such as Anaheim, San Francisco and San Jose. People in those areas, Redfin said, were forced to rent in 2023 because of high housing costs.

On the other end of the spectrum, Midwest metros have been among the most affordable, with someone in Detroit making the median income only spending about 18% of their earnings on monthly housing costs.

Looking to 2024, Redfin expects mortgage rates to drop to about 6.6% and prices to drop 1% as new listings find their way onto the market.

“A perfect storm of inflation, high prices, rising mortgage rates and low housing supply resulted in 2023 being the lowest year for housing affordability in recent memory,” Redfin Chief Economist Elijah de la Campa said in a statement. “The good news is that affordability is already improving ahead of the new year.”

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