How much do you need to earn to buy a home in Greater Boston? At least $181,000 a year, says new study.

Harvard estimates assume a 3.5% down payment on a 30-year fixed-rate mortgage and that homebuyers would spend no more than 31% of their income on mortgage payments. They also assume a mid-priced home valued at $659,161 in the Greater Boston area, which covers most of eastern Massachusetts and southern New Hampshire, but is significantly lower than prices found in most communities within Route 128. Boston is nearly double the region’s median household income of $93,537.

The report comes after a year in which home prices and rents across the country soared at the “fastest pace in decades,” as the Harvard report put it. Nationally, home prices rose 20.6% in March – the biggest increase in 30 years. In the Greater Boston area, prices rose 15.9%.

“If you are a home owner, you just won the lottery. And if you don’t go, you’ve been locked out for a long time,” said Chris Herbert, managing director of the Harvard Joint Center for Housing Studies. “This is certainly very true in the Boston area, where housing prices are so high to begin with.”

And lately, interest rates have skyrocketed, with the average rate on a 30-year fixed-rate mortgage nearly doubling since the start of the year. The market hasn’t seen anything like it since the so-called “Volcker Shock,” named after former US Federal Reserve Chairman Paul Volcker, in 1980, when mortgage rates soared 4 percentage points in a three-month period, Jeff Tucker said. , senior economist at housing website Zillow.

“The change in mortgage rates is really multiplying the affordability impacts of price increases that have occurred during the pandemic,” Tucker said. “This has created an absolutely extraordinary increase in the cost of home ownership. The monthly cost of a mortgage payment has skyrocketed in the past year when you take that combination of higher prices and higher interest rates.”

In markets like Greater Boston, where white families are about twice as likely to own their homes as black and Hispanic families, the rapid rise in home prices has widened the racial wealth gap even further, the report says. Harvard. The combined effect of rising prices and a sharp jump in interest rates “will put a stop to the historic inequality in terms of who managed to own it,” Herbert said.

Much of the demand for homes over the past year and a half has come from would-be buyers interested in locking in record low interest rates, which, Tucker said, “has enabled a lot of people to make the numbers work, even buying homes they once considered unaffordably expensive.” ”.

There are potentially colder times ahead. Rising prices and a sharp jump in mortgage rates have already driven many potential buyers out of the market, and sales volume has slowed in recent months in many parts of the country.

The current bounce is “coming right as the market was the hottest it has ever been by any measure,” Tucker said. “This is already starting to cool the market.”

A cooling down could create healthier conditions for the housing market, but experts say more supply is needed.

The Harvard report pointed to Massachusetts’ new rule requiring the 175 counties served by the MBTA to reserve certain areas for multifamily housing. The proposed rules have met resistance from some cities, and the state this spring is reviewing the feedback before releasing its final guidance.

The local stock of available homes has been low for years, and the US has been “heavily undersupplied” since the Great Recession of 2008, said Herbert of the Harvard JCHS. That’s an important factor that makes this moment in the housing market different from the crash of 15 years ago, he said. In 2006, the US built 2 million new homes, many of them purchased with large mortgages that their owners could not afford. When prices fell, a wave of foreclosures sent the market crashing.

This time around, tighter borrowing standards and higher down payments mean most homeowners have more equity.

“We have a lot of wealth out there that is helping to drive those prices up,” Herbert said. “But it’s equity. It’s not debt. So it’s a very different market that way.”

Do you have a Massachusetts house-hunting story? Tell us in the comments.


Catherine Carlock can be reached at catherine.carlock@globe.com. Follow her on Twitter @bycathcarlock.

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