The combination of mortgage rates above 7% and rising home prices has contributed to the monthly payment for a buyer looking for an average home to double since before the pandemic, according to an analysis by Realtor.com. Using a 7.37% mortgage rate, Realtor.com estimates the monthly payment for an average home has grown from $1,200 in the summer of 2019 to $2,430 in July 2023. While wages have also grown during the same period, the rate of growth is well beyond the rate of growth for monthly homeownership costs.
And the increased homeownership costs are even more dramatic for the lower price segment often referred to as “starter homes,” putting the most pressure on first-time homebuyers who already face the burden of saving for a home without the benefit of accruing equity.
Our examination of the data shows starter homes in some areas of the country now have a monthly payment that is triple or nearly quadruple what it was a few years ago.
In Wichita, Kansas, known for its robust industrial and aviation economy, the monthly payment for a starter home has increased by a staggering 271% since 2019—the largest percentage increase, and the result of starter home prices rising from about $85,000 to now $210,000, combined with the currently elevated mortgage rates.
These soaring monthly costs for homes that cater to first-time buyers are reflected across some of the most historically affordable parts of the country, testing a key component of the American heartland’s charm: low home prices.
