Currently Reading

How Affordable Are Homes for First-Time Buyers?


How Affordable Are Homes for First-Time Buyers?

September 2, 2020
Couple viewing house with real estate agent
By goodluz

If rising prices, historically low inventory, an entire pandemic, and record unemployment did not keep first-time buyers away, will anything? Probably not. NerdWallet reports that 35% of existing home sales in the month of June were from first-time buyers. But homes are not affordable for many, and homes in the largest metro areas became less affordable for first-time buyers in the second quarter. NerdWallet was able to analyze home affordability for first-time buyers by analyzing median income for the 25 to 44 age range compared to listing prices, which gives them an affordability ratio. See the least and most affordable cities by reading more.

In this quarterly report, we analyze median incomes in the first-time home buyer age range (25-44) compared with listing prices among the 50 most populous metro areas to come up with an affordability ratio. Budgeting for a home that costs roughly three times your annual income (an affordability ratio of 3.0) has been a rule of thumb for years, but first-time buyers often have to stretch beyond this to account for higher prices in metro areas and their lower incomes compared with repeat buyers. By weighing the affordability ratio versus home availability in the largest metro areas, we can get an idea of the conditions first-time buyers are facing when they set out to become homeowners.

By looking at both quarter-over-quarter and year-over-year changes, we can get a better picture of the effects of the COVID-19 economy on this year’s homebuying market. The former can provide insight into chronological market responses to the pandemic — our first-quarter affordability report captured data only through March, just the beginning of 2020’s atypical spring season. The latter can show how this year’s second quarter contrasts with similar periods in relatively normal times.

Read More

Related Stories


Pandemic Likely to Further Strain Cost-Burdened Homeowners

The number of homeowners that were cost-burdened dropped 9% overall during the past nine years, but low-income households only experienced half of…

Housing Markets

Cities Where Buyers Can Afford the Most and Least

Housing affordability continues to be an issue for many Americans. Nearly 67% of Americans are bunkered down by at least one non-mortgage debt.…

Housing Markets

These Cities Are Becoming More Affordable for Renters

More than 40% of renters pay more than a third of their income on housing costs, meaning affordability typically affects renters more than it…


More in Category


Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.

Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.