The cost of door-to-door payments is skyrocketing across the state
The double whammy of soaring home prices and rising mortgage interest rates means a buyer in Virginia would need 71% more income now to buy a typical property than that same buyer would. needed only 24 months ago.
Trade group Virginia Realtors crunched the numbers and came up with an estimated income of $95,915 needed to buy a home at the median Virginia selling price in May of $401,000, with a typical fixed mortgage of 5.81% on 30 years.
That estimated income needed to afford a home — well above Virginia’s median income — is up from $56,015 in May 2020, when the median home sales price was $315,000 and the mortgage rate average was 3.28%, according to figures compiled by Virginia. Real estate agents.
By May 2021, the median sale price had risen to $369,000, but the average interest rate had fallen to 2.94%, requiring an estimated income of $62,872 to afford a property without exceeding the standard benchmark 28% of gross family income.
(Figures assume 5% down payment, 1.5% closing costs and 30-year fixed rate loan.)
“It’s been a competitive market for potential buyers for years, but conditions have gotten much tougher recently,” said Ryan Price, chief economist for Virginia Realtors.
“The estimated monthly payment has skyrocketed by around $770 since May 2021. This will likely leave many buyers on the sidelines, and there is little indication that prices will come down,” Price said.
As of May 2021, the estimated family income needed for a typical home purchase is $56,015 compared to a median Virginia household income of $76,398.
The median household income has been above the estimated income needed to buy a typical home since at least 2017 and likely well before that.
Virginia’s median household income for 2021 has yet to be reported by the US Census Bureau, but it likely was higher than the typical $62,872 income needed to purchase a home. But with the amount needed to afford a home reaching close to $100,000 under current conditions, it looks like incomes, while on the rise, won’t grow fast enough to keep pace.