Buying a starter home in New York was already a stretch for the average household.<\/p>\n
Now mortgage rates are back above 7%<\/a> \u2014 adding yet another hurdle for would-be homeowners already contending with stubbornly high prices and a shortage of homes for sale.<\/p>\n The New York metropolitan area is the fifth-hardest place in the country to get on the property ladder, according to new research from personal-finance company Achieve.<\/p>\n NYC buyers need $114K to afford an entry-level home. Getty Images<\/p>\n An entry-level home in the metro costs about $489,359, while the median household earns $99,155.<\/p>\n Assuming a 10% down payment and keeping mortgage payments to 30% of gross income, Achieve calculated that a household would need to earn $114,380 a year to comfortably afford that home \u2014 15.4% more than the typical household actually makes.<\/p>\n And that calculation comes as borrowing costs are heading in the wrong direction.<\/p>\n The average 30-year fixed mortgage climbed back above 7% this week after years of languishing inflation, further eroding the purchasing power of buyers who need financing.<\/p>\n For buyers, however, the problem is much bigger than the mortgage rate alone.<\/p>\n Appraiser Jonathan Miller<\/a>, of StreetMatrix, told The Post that an acute shortage of homes for sale is preventing the normal market correction that might otherwise give buyers some relief.<\/p>\n \u201cWhen we think about affordability, I think the influence of inadequate inventory is more powerful on the affordability topic than actual rates themselves,\u201d Miller said.<\/p>\n Normally, Miller explained, a sharp increase in borrowing costs would cause sales to fall, inventory to build and prices to soften.<\/p>\n This time, that last part isn\u2019t happening.<\/p>\n \u201cMortgage rates are over 7%, and prices are still rising, right? That\u2019s not logical to many people,\u201d Miller said. \u201cBut the reason it\u2019s not logical is because the limited inventory is distorting everything.\u201d<\/p>\n Mortgage rates are back above 7%. Getty Images<\/p>\n Buyers are getting squeezed from every direction<\/p>\n Part of the problem is the so-called mortgage \u201clock-in effect.\u201d<\/p>\n Millions of homeowners secured ultra-low mortgage rates in previous years and now have little financial incentive to sell their homes and take out a new mortgage at around 7%.<\/p>\n \u201cYou\u2019ve got to get all the people that are sort of locked in because they\u2019ve got a 2.75% mortgage,\u201d Miller said. \u201cThere\u2019s no way they\u2019re gonna trade that for a new house with a 7.2% mortgage. They\u2019re gonna sit tight.\u201d<\/p>\n