Housing Affordability Slipping Away as Prices Outpace Income

Housing Affordability Slipping Away as Prices Outpace Income The dark side of rising home prices and tighter inventories in many communities is the decline of housing affordability.
A new study from Interest.com fond that the American dream of owning a home is slipping out of reach of more families.
Along with robust home prices, rising interest rates combined with anemic increases in family income are forming a near perfect storm of unaffordability.
In each of the 25 largest metropolitan areas studied, home prices outpaced family income.
Prices have risen so much that a median-priced home was affordable for a family earning a median income in only eight of those cities, compared with 14 a year earlier.
“The simple fact is that the very small improvement Americans have seen in their paychecks hasn’t kept pace with a jump in home prices and mortgage rates,” said Mike Sante, managing editor of Interest.com.
On average, home prices rose nearly 16 percent over the last year in the 25 cities, while incomes rose by about 3 percent.
“In city after city, rising prices mean the house that a family with an average income can afford has shrunk,” Sante says. “In many, home ownership is largely out of reach of median-income households.”
Mortgage rates, although still low by most historic standards, are about a point higher than they were last winter and spring, contributing to the decline in home affordability.
The average cost of a 30-year, fixed-rate home loan is 4.43 percent in this study, up from 3.70 percent last year.
To conduct its annual Home Affordability Study, Interest.com gathered city-specific data on median home prices and incomes, average property taxes and insurance costs, as well as consumer debt and mortgage rates.
Housing Affordability Slipping Away as Prices Outpace Income

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