A new report has found that things aren’t looking good for prospective home buyers in the United States, as in several parts of the country, home prices far outpaced wages.
The report from the Harvard Joint Center for Housing Studies highlights the recent economic struggle for many who are being shut out of the world of home owning. Since early 2020, the report states that home prices are up 47%, with the median home price being about five times the median household income, the report found.
This is a major change from just a decade prior, when homes were typically priced at three times a buyer’s annual income.
Now, Daniel McCue, a senior research associate at the center, shared with NPR that the combo punch of high prices and high mortgage rates has “left homeownership out of reach to all but the most advantaged households.”
The report highlights that buyers in nearly half of metro areas need to make more than $100,000 to afford a median-priced home. Compared to 2021, the number of metro areas where six figures were necessary was just 11%.
This also comes as the current median household income was $74,580 in 2022, according to the latest data from the Census Bureau. So for the average American, buying a home is almost impossible in half of the country’s metro areas.
“The all-in monthly costs of the median-priced home in the U.S. [when adjusted for inflation] are the highest since these data were first collected more than 30 years ago,” the report shared.
Monthly costs include not only mortgage payments but also property taxes and insurance rates, all of which the report says are on the rise.
Part of the problem making it harder for prospective buyers is the lack of motivation for current homeowners to sell, which would see them relinquish their lower mortgage rates.
Last year saw the lowest level of existing home sales in almost 30 years, even falling below what was seen during the 2008 housing crash.
Still, homeownership did rise last year, jumping 0.1%. That rate increase was the smallest since 2016.