Kerby Anderson
A few months ago, I talked about the future decline in home ownership. For example, the number of first-time homebuyers declined to just 26 percent in 2022. This was the lowest level since the National Association of Realtors began tracking data.
The latest research from Zillow explains this significant decrease. The report estimates that you would need to make more than $106,000 annually to comfortably afford a home. Put another way, that suggests that more than half of American households can’t afford homeownership.
Let’s compare home prices and annual income in 2020 to this year. Back then, an annual income of $59,000 could pay a mortgage without spending more than 30 percent of the income (assuming a 10 percent down payment). That year the US median income was about $66,000. More than half of American households could afford homeownership.
Today the median income is around $81,000, which is far short of the $106,000 need to comfortably maintain payments. The monthly payment on a typical US home has nearly doubled since 2020.
Of course, these are averages. Here is a short list of cities that need a much lower household income to afford a home: Pittsburgh, Memphis, or Cleveland. Compare that to cities that require the highest family income: San Jose and Silicon Valley, San Francisco, and Los Angeles.
The cost of housing has skyrocketed, and interest rates have also increased. First-time home buyers are the families most affected by these increases. That makes it hard not only to find a home but to find one you can afford.
Owning a home used to be the American dream. For an increasing number of Americans, that dream seems out of reach.
This post originally appeared at https://pointofview.net/viewpoints/owning-a-home/?utm_source=rss&utm_medium=rss&utm_campaign=owning-a-home
