More Than a Third of Households Earning U.S. Median Income Cannot Afford Home Purchases

For homeowners dealt a blow during the housing bust and financial crisis of 2007-2008, rising home prices have helped restore home equity.

But more than a third of Americans — 38 percent — earning the national median household income of $63,900 cannot afford to buy a home that sold over the last quarter, according to the latest National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), released this week.
And those rising home prices are partly to blame, along with stagnant incomes, mounting student loan debt and tougher credit standards requiring unattainable down payments.
Overall, 61.8 percent of new and existing homes sold between the beginning of July and the end of September were affordable to families earning the U.S. median income. That’s down from the 62.6 percent of homes sold that were affordable to median-income earners in the second quarter.
The national median home price increased from $214,000 in the second quarter to $221,000 in the third quarter. Meanwhile, average mortgage interest rates slid from 4.44 percent to 4.35 percent in the same period, according to home builders.
Affordability ‘Fairly High’
“Even with nationwide home prices reaching their highest level since the end of 2007, affordability still remains fairly high by historical standards,” said NAHB Chief Economist David Crowe. “Rising employment and incomes, interest rates that remain near historically low levels, and pent-up demand should contribute to positive momentum heading into next year.”
Among the most affordable major housing markets? In Youngstown, Ohio, for example, nearly 90 percent of all homes sold last quarter could be comfortably purchased by families earning the local median wage. Among others at the top of the affordable scale: Syracuse, N.Y., Indianapolis, Ind., Harrisburg, Pa., and Dayton, Ohio, all recording affordability rates of 84.9 percent or higher.
Not surprisingly, San Francisco, where the median home price is $875,000, is thee least affordable major U.S. city. Only 11.4 percent of homes sold in San Francisco during the third quarter were reasonably priced enough for the average family to buy, the index found.
Other major cities where home prices were out of reach for most Americans included Los Angeles, Santa Ana, Calif., San Jose and New York.

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