Increasing Home Prices Continue to Inhibit Renters From Becoming Homeowners

According to a recent study conducted by realtor.com, last year’s cost hikes in the price of new and existing homes for sale eliminated nearly one million renters from the ranks of potential homeowners. The study reports that the income a household needs to pay a mortgage for a median-price home climbed to $62,872 in 2021, up from $55,186 in 2020. The price calculation is based household income needed to pay the mortgages affordably, so that the mortgage payment with interest does not exceed 25% of the household’s income.

In 2021 the median existing-home sales price averaged $345,442 — a 16.4% increase from median sales price of $296,700 in 2020. The increase in home price costs is making it more difficult for renters to qualify for a mortgage.

The National Association of Realtors®, using the numbers from above, estimates that the number of renter households that can pay the mortgage affordably has declined from 8.75 million to 7.71 million.