PHOENIX — New data from the National Association of Home Builders finds that about three in four households in Arizona would struggle financially to purchase a median priced home in the state.
The study looks at new median home prices across the country along with interest rates and incomes to determine what share of households are priced out of the market. National numbers are telling. Almost 70%, 87 million households across the US would be over-extended if purchasing a home at the median price of $412,505. Today, only 2.9 million US households are above the income threshold recommended to purchase a house valued over $1.55 million. On the other end of the spectrum, 36 million, more than 10 times the number, 36 million households take home enough to comfortably purchase a house valued at under $150,000.
Data for Arizona paints a similar story.
At the time of the study in February 2022, a median-valued new home in the state was priced at $464,413. An Arizona household would need an annual income of $102,987 to afford that. Nearly three-quarters of households are under that annual income, estimated to be 738,906 households out of 2,846,208.
There is some fluctuation amongst the state’s metro areas that were looked at. The Tucson metro had the highest median value of any metro at $526,703. At that level, more than 86% of households in the metro could not afford a home.
The situation was a little better in smaller metro areas. Both the Sierra Vista area and the Yuma metro area had median values of under $300,000. In Sierra Vista, 55% of households did not have an income to support the median-valued home. While still a majority, the region had one of the best ratios in the country. Only 20 other metro areas had a smaller share of priced out households.
The study also shows that interest rates play a big role on who is priced out. At the current rates of about 3.5%, households need an income of just under $100,000 to buy that median-valued new U.S. home. A one-point increase in the rates change the recommended income to $108,782. A two-point increase and the necessary household income goes to $118,878.