The calculation underscores how borrowing costs are making homes less affordable even before the pandemic-era surge in prices is factored in. A family with a household income of $66,850 in December 2020 could have afforded a home priced at $478,000, but by December 2021 that same family (assuming the same income and a 5% down payment) could have only spent $453,000, according to Kushi. The reason: rates for a 30-year fixed rate mortgage rose from 2.68% to 3.10% (as tracked by Freddie Mac) over that period. Interestingly, when an increase in wages is factored in, Kushi’s calculation is vastly different. Workers are in high demand, and wages have gone up. Assuming a 4.9% increase in household income by December 2021, buyers have only lost $3,000 in buying power, she said. Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.
