This Was the Median Home Sale Price in November 2022. Can You Afford It?

If the answer is "no," don't chalk it up to a failing on your part.

Home prices have been up on a national level for quite some time now. In fact, that scenario started back in the summer of 2020, when mortgage rates started falling to record lows at a time when new home listings slowed down. 

Meanwhile, mortgage rates have been sky-high for much of 2022. In fact, anyone who signs a mortgage today is potentially looking at double the rate they would've managed to lock in a year ago.

In spite of that, home buyer demand hasn't slipped too much. And sellers are still getting away with commanding higher prices for their homes. 

In November, the median existing home sale price was $370,700, according to the National Association of Realtors. That represents a 3.5% increase from November 2021, when the median existing home sale price was $358,200.

All told, the housing market has experienced 129 consecutive months of year-over-year increases in median home sale prices. And 61% of homes sold in November were on the market for less than a month, which is a clear indication that buyer demand is still reasonably strong. 

If you've been trying to buy a home for months on end, you may be wondering if now's a good time. And the answer? It depends on your financial situation.

Can you afford a home in your target neighborhood?

The median home sale price in November may have been $370,700. But that's not necessarily what you'll pay for a home in the area you want to live in. 

Maybe you're hoping to buy in a large city where the median home will cost you $850,000. Or maybe you're buying in an area where homes are cheaper, so you can find a property you'll be comfortable in for $250,000. 

Either way, a good way to know if you can afford to buy a home today is to crunch some numbers and see if you can manage to keep your monthly housing costs to 30% of your take-home pay or less. That's really the limit you should stick to if you want to avoid a financial crunch.

When we talk about keeping your housing costs to 30% of your income or less, we don't just mean that your mortgage payment itself shouldn't exceed 30% of your paycheck. Rather, that 30% limit should include all of your housing costs, from property taxes to homeowners insurance to HOA fees, if you're required to pay them (which will likely be the case if you're looking to move to a townhouse or condo). 

So, let's say you bring home $6,000 every month. That gives you the leeway to take on up to $1,800 a month in housing costs. If you can buy a home based on that limit, then you should feel comfortable moving forward with an offer. 

Of course, keep in mind that right now, you're apt to get stuck with a higher home price and mortgage rate than you normally would. But if you can afford to buy and you don't want to wait, then moving forward isn't necessarily a poor choice.

Will home prices soon come down?

That's really the big question. Buyer demand has been slowing, and if real estate inventory increases in 2023, we could see a nice dip in home prices. 

But we can't say with certainty if that will happen. And so if you're in a position now to buy a home without busting your budget, then you may want to take that leap.