Here’s how much money you need to make to buy a house near Boston

It’s no secret that home prices in the Greater Boston area have skyrocketed in recent years and have worsened exponentially during the pandemic.

But the findings of a new study on exactly how much you need to earn to buy a home locally these days may still shock you.

A new report on the state of housing in the United States by Harvard University’s Joint Center for Housing Studies has found that you need to earn more than $181,000 a year to afford a median-priced home in the area. of Greater Boston.

Compare that to the median household income for that same region of $93,537and that number becomes even more daunting.

The estimate assumes a 3.5% down payment on a 30-year fixed rate mortgage and buyers would spend no more than 31% of their income on mortgage payments. He also considers a median-priced home to be valued at $659,161.

The report comes after a year of explosive house prices. According to the National Association of Realtors, during the first fiscal quarter of 2022, home prices nationwide rose nearly 16% year-over-year.

In Massachusetts, WBUR reported, home price increases have always been extreme, but not as dramatic. He reported home prices in the state in April 2022 were up nearly 10% year-over-year.

“If you’re a homeowner, you’ve just won the lottery. And if you’re not, you’ve just been locked out for a long time,” said Chris Herbert, executive director of the Harvard Joint Center for Housing Studies. The Boston Globe Wednesday.

Things could get worse for homebuyers as the Federal Reserve raises interest rates. According The New York Times, average mortgage rates have already jumped two percentage points since the Fed raised interest rates earlier this month. This is a huge contrast to the very low mortgage rates recorded even last year, which hovered around 3%.

“The change in mortgage rates really multiplies the affordability impacts of the price increases that have happened throughout the pandemic,” said Jeff Tucker, senior economist for housing website Zillow. World.

“It created an absolutely extraordinary increase in the cost of ownership. The monthly cost of a mortgage payment has increased astronomically over the past year when you take this combination of higher prices and higher interest rates. »

In Greater Boston, white households are about twice as likely to own their homes as black and Hispanic households, according to the Harvard report. As a result, the exponential growth in house prices is exacerbating the racial wealth gap, he says.

Homebuyers looking to take advantage of historically low interest rates have been a major cause of unreal demand for homes since the start of the pandemic, which Tucker told the World “has allowed a lot of people to make the numbers work, even buying homes they previously would have considered unaffordable.”

Home prices could decline as more buyers are forced out of the market due to rising mortgage rates, World reported, but experts say housing supply is still low in our area, as it has been for years.

Experts are looking to see what happens to the home buying market over the next few months as rising mortgage rates take effect.

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