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$142K salary needed to afford a 'starter' home in Seattle, Redfin reports

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A "starter" home in Seattle looks a lot different than elsewhere in the United States — it's a lot more expensive and you need to earn a lot more to afford it.

“Buyers searching for starter homes in today’s market are on a wild goose chase because in many parts of the country, there’s no such thing as a starter home anymore,” Redfin Senior Economist Sheharyar Bokhari said in a statement.

According to recent data published by Redfin, a first-time homebuyer needs to earn about $64,000 annually to afford a “typical” starter home in the United States. That is up 13%, which is about $7,200, from a year ago. Such a home was selling for $243,000 in June, which Redfin notes is 2.1% higher than June 2022. In 2019, a first-time home cost around $166,500 in the United States.

“The most affordable homes for sale are no longer affordable to people with lower budgets due to the combination of rising prices and rising rates," Bokhari said. "That’s locking many Americans out of the housing market altogether, preventing them from building equity and ultimately building lasting wealth. People who are already homeowners are sitting pretty, comparatively, because most of them have benefited from home values soaring over the last few years. That could lead to the wealth gap in this country becoming even more drastic.”

The national numbers pale in comparison to Seattle where the median sale price of a starter home is around $535,000. Redfin reports that a person needs to earn $141,794 a year to afford this type of property, with a median mortgage payment of $3,545. That's 4.4% higher than a year ago.

Redfin notes that starter home prices declined over the past year in Seattle, as well as Portland, and other large West Coast cities. But the income required to afford those homes is now higher than in 2022. That's largely because of higher mortgage rates.

For a non-starter home, Redfin reported last November that a person needs to earn $205,000 annually to afford one in Seattle.

It's also worth noting that luxury home prices in Seattle are also down — they declined 12.3% over the past year. That's the largest decline in the USA, but don't get your hopes up. The price for such Seattle luxury homes is around $2.5 million.

If you're looking for a better deal, homebuyers may want to consider looking around Phoenix, Arizona. That's among the top destinations for out-of-town, and out-of-state homebuyers right now, and Seattleites are leading the pack.

Another Redfin report on housing migrations adds up the top cities homebuyers are targeting for cheaper prices.

While Las Vegas is the number one area folks are leaving their home cities for, Phoenix comes in second. The top origin city for folks moving there is Seattle, according to Redfin's data. Homebuyers are also leaving LA, New York, Chicago, and the Bay Area for these cheaper cities. Seattle ranks seventh when it comes to places people are leaving in search of better home prices.

This data only represents Redfin users, and the real estate company also points out that this type of migration is actually down this year.

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