Home seekers lost $3,100 in buying power in 2023, according to an analysis conducted by Point2Homes. While not insignificant, it is an improvement from 2022, when buyers experienced a $96,800 contraction in buying power.
In 2023, the median income increased to $78,200, but home prices appreciated at a higher rate, contributing to decreased buying power for prospective homeowners. According to Point2Homes, the average aspiring home buyer would be able to purchase a $275,000 property, assuming a standard 20% down payment and a mortgage that would not require more than 30% of an individual’s monthly income. Not only does this represent a decline compared with 2022, but with the national median sales price at $412,000, a $275,000 home may not be available in many metro markets.
As part of its research, Point2Homes analyzed data for the 100 most populous cities in the United States. According to Point2Homes, the median home price in the country is now 50% higher than the affordable home price, and the share of homes that are categorized as “affordable” make up less than 28% of the national for-sale inventory.
In Lincoln, Nebraska, as well as Oklahoma City and Tulsa, Oklahoma, home seekers lost more than $30,700 in buying power. While many Midwest cities experienced a decline in buying power, high median wages in several California cities mean home seekers gained purchasing power in 2023. In Irvine and San Francisco, home seekers gained approximately $53,050 and $42,250 in buying power, respectively. Buyers in 48 other large cities can now afford more compared with 2022, ranging from modest gains of $250 in Seattle and Nashville, Tennessee, to gains over $35,000 in Anchorage, Alaska, and Washington, D.C.
In addition to a decrease in buying power, the analysis by Point2Homes revealed buyers in 61 large cities can afford less living space than a year ago. Home seekers in Lincoln could afford 297 less square feet per home compared with 2022, the equivalent of more than two average bedrooms. Home buyers also lost a two-bedroom equivalent in square footage in Detroit, Tulsa, and Wichita, Kansas.
Conversely, potential buyers in Memphis, Tennessee, can afford 164 square feet more than in 2022. Buyers in Buffalo, New York; Boise, Idaho; North Las Vegas, Nevada; Jacksonville, Florida; Mesa, Arizona; and Glendale, Arizona, also could afford over 100 square feet more than what they could a year ago.
