Homes becoming more unaffordable in swing states: Redfin

A new Redfin report shows that typical monthly payments for homebuyers in swing states have nearly doubled since the 2020 election. Redfin head of economic research Chen Zhao joins Wealth! to break down the report and why housing has become unaffordable for many Americans.

Zhao explains that the mortgage payment associated with a median-priced home in a swing state has risen 92% since 2020. "The reason for that is because home prices have gone up more than 40% and mortgage rates have more than doubled in that time. So that's really driving the increase," she says. She adds that American families making the median household income would have to spend 33% of their income to buy a median-priced home, marking a 22% rise since 2020.

As the housing supply gets squeezed, buying a home has become much more expensive. While prices have risen in the past, Zhao explains that his increase is different:

"Home prices actually also went up a lot between 2016 and 2020. They also went up about 40%, as they did between 2020 and 2024. But the difference is that mortgage rates did not go up between 2016 and 2020, but between 2020 and 2024, we went from ultra-low mortgage rates to now high 6 to 7% mortgage rates. And that's really driving the difference between those two time periods."

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This post was written by Melanie Riehl

Video Transcript

I wanna talk about a new report out that Redfin has today that says in swing states, typical monthly payments for a home buyer has nearly doubled since the 2020 election.

Uh, tell us more about some of the findings here, of course.

So what we have seen um, in our calculations is that the uh mortgage payment that is associated with a medium price home in a swing state has gone up 92% since 2020.

And the reason for that is because home prices have gone up more than 40% and mortgage rates have more than doubled, um, in that time.

So that's really the increase and what that means for homeowners, um, or people who are wanting to buy homes is that for a family making the median household income, they would have to spend 33% of their income.

Now, in order to buy a median priced home, um, and that is up from 22% 4 years ago.

And if we look at the supply side, what we see is that just about one third of homes that are available for sale are affordable to a household that's making the median income and that is down from two thirds, two years, uh not two years ago, four years ago.

I'm sorry.

So all across the board by all of these different measures, what we're seeing is that a affordability has really just become a real problem for people across the country and also particularly in swing states.

I mean, we think about 2020 of course, and the year that was, and of course rates dropping to zero cut in order to make sure that there was a spurring of demand.

Um, and ultimately between 2020 2021 there were a lot of new homes that were purchased because rates were so favorable.

I, I wonder, you know, how much adjustment needed to be taken into account here when looking at the difference in mortgage rates and mortgage payments that are being made.

Yeah.

So there are both of those things.

Um, it's both home prices and mortgage rates that's really driving this huge increase in housing cost.

So, um another way to think about this is that home prices actually also went up a lot between 2016 and 2020.

They also went up about 40% as they did between 2020 2020 four.

But the difference is that mortgage rates did not go up between 2016 and 2020 but between 2020 2024 we went from ultra low mortgage rates to now.

Um, you know high 6 to 7% mortgage rates.

And that's really driving the difference between those two time periods.

Really great context there, Chen Zhao, who is the head of economic research over at Redfin Chen.

Thanks so much for taking the time.