Typical renters in Minneapolis can only afford to buy 24% of homes available
MINNEAPOLIS -- A new analysis of real estate across the country shows that a typical renter - someone who earns the median income of their city - can afford to buy a home in only four major U.S. cities.
Minneapolis is not one of those cities.
According to the First American Financial Corp. analysis, typical renters can only afford to buy 24% of homes available in Minnesota's biggest city.
For comparison, it's just as hard to buy a home for typical renters in Miami, Florida.
If you're a renter and want to buy a home, you're going to find the most choice in Buffalo, Cleveland, Detroit, and Pittsburgh, according to the analysis.
California is home to four of the most expensive places for typical renters to buy a home: Los Angeles (1%), San Francisco (2%), San Diego (2%), and San Jose (4%).
The analysis notes that an affordable real estate market means a typical renter can afford 50% or more of the homes for sale in their city.
READ MORE: The typical renter can only afford to buy a home in four cities. Here's where they are.
Across the nation, there has been a sharp drop in affordability for first-time homebuyers during the past year, largely due to surging mortgage rates. A year ago, about 45% of homes were affordable for renters, but that's declined to 34% today, the analysis found.
There are two reasons for the decline in real estate affordability: Higher mortgage rates and home prices.
The average rate on a typical 30-year mortgage reached 6.91% this week, up from 6.69% a week ago and the highest level since November, the Mortgage Bankers Association (MBA) said Wednesday.
An expert told CBS News that renters should shop around for a mortgage as a lot of first-time buyers don't realize they can get quoted a lot of different rates.