Americans cannot afford to live in more than 70% of the country despite rising wages and falling mortgage rates. According to ATTOM Data Solutions, 335 of the 473 U.S. states were analyzed and listed median home prices that were higher than what average wage earners could afford. These include Los Angeles, San Diego and Maricopa County in Arizona.
According to the report, New York City accounted for the highest percentage of an individual’s income needed to buy a home. The average American household must spend about one-third of its income on a home. However, Manhattan residents and Brooklyn residents have to spend more than 115 per cent of their income. Residents in San Francisco must spend 103 per cent, while those living in Hawaii’s Maui County have to spend 101 percent. Chicago, Cleveland and Houston were the most affordable cities for homes, as was Detroit, Detroit, Philadelphia, and Houston.
Generally speaking, houses are now more affordable than they were a year ago. Although home prices are rising in some areas, they are also decreasing in others. The slow pace of homebuilding and the longer-term stability of homeowners has led to market instability. These trends have led to a decrease in supply of homes on the market.
The market could still create more favorable conditions for buyers, provided that interest rates don’t rise and the tax cuts from last year’s aren’t completely forgotten. Todd Teta (chief product officer at ATTOM Data Solutions) stated that affordability may increase because many people are unable to afford homes.
The market today is also much more affordable than it was ten years ago, prior to the housing crisis. Pre-Great Recession, home values were either higher or similar to the present day, while income, even adjusted for inflation, was lower. However, subprime mortgage lending was rampant and allowed many people to purchase homes they couldn’t afford.
Teta stated that the market was kept alive by looser lending standards. This was to compensate for affordability problems. Since then, lending standards have become more stringent and many Americans are finding it harder to buy homes.
