The gains that lower-income homebuyers made during the hot housing market have the pandemic have faded by early 2024. According to Redfin, low-income earners took out 23.2 percent of all new mortgages in 2020—but now just 20.6 percent new mortgages went to low-income Americans.
Nationwide, the median household income in the Home Mortgage Disclosure Act (HMDA) data for very-low-income households who purchased a home in 2023 was $41,000. It was $64,000 for low-income households, $96,000 for moderate-income households and $172,000 for high-income households. The estimated median overall household income in the U.S. was roughly $84,000 in 2023.
Just under 6 percent of new mortgages issued last year went to very low income Americans, down from 7.7 percent in 2020.
“There was a sweet spot in 2020 when mortgage rates were ultra low and home prices had yet to skyrocket, allowing some lower-income Americans to break into the housing market,” said Redfin Senior Economist Elijah de la Campa. “But somewhat ironically, the continued strength of the economy has made it harder to afford a home and widened the real-estate wealth gap between rich and poor Americans. The Fed’s interest-rate hikes, meant to help cool inflation and slow a hot economy, have pushed mortgage rates to near their highest level in more than two decades. That’s on top of home prices, which skyrocketed during the pandemic buying boom and have stayed high due to a shortage of homes for sale.”