Report: 75% Of US Homes Are Unaffordable For Average Buyer
Report Shows 75% Of US Homes Are Unaffordable For Average Buyer
It’s become increasingly apparent that the U.S. economy simply isn’t working for the average American by nearly every metric that matters. Homeownership, long seen as a sign of economic advancement and essential to building wealth, has become out of reach for more and more people. A recent report found that 75% of homes are unaffordable for the average American buyer.
According to CBS News, Bankrate’s report defines an affordable home as one in which annual housing costs don’t exceed 30% of the owner’s income. As of 2024, the average median income in America is $84,000, well below the $113,000 necessary to purchase a home. Bankrate found that the average American home now costs $435,000. That number is higher in cities like New York and San Francisco, where an income of at least $200,000 is necessary to purchase a home.
“Only a sliver of the housing market is affordable to the typical household,” Bankrate data analyst Alex Gailey told CBS News. “That’s when homeownership starts to feel less like a common middle-class milestone and more like a luxury.”
Despite prices being so high, Bankrate found that demand hasn’t been curbed, with many buyers purchasing homes beyond what they can comfortably afford. Even if one happens to be lucky enough to find the 1 in 4 houses that’s actually affordable, the competition is often so intense that it ultimately drives the prices up. It also doesn’t help prices when private equity firms continue purchasing more and more of the available homes. As a result, the rate of first-time homeowners has fallen to a historic low of 21%, with the median age of homebuyers at 40.
“The historically low share of first-time buyers underscores the real-world consequences of a housing market starved for affordable inventory,” Jessica Lautz, the National Association of Realtors deputy chief economist and vice president of research, said in a report.
“The share of first-time buyers in the market has contracted by 50% since 2007 – right before the Great Recession. The implications for the housing market are staggering. Today’s first-time buyers are building less housing wealth and will likely have fewer moves over a lifetime as a result.”
So obviously, this does not bode well for Black homeowners.
While the homeownership rate has fallen nationwide, the drop has been more significant for Black families. A report from Redfin found that Black homeownership has dropped to its lowest rate in four years. The homeownership rate among Black families fell to 43.9% in the second quarter, the lowest it’s been since the fourth quarter of 2021. A year ago, the rate stood at 45.3%, marking the most significant year-over-year decline since 2021.
Redfin Chief Economist Daryl Fairweather cited rising unemployment as “one likely reason” for the drop-off in Black homeowners. “The recent wave of federal layoffs hit Black households badly because government jobs have historically been an avenue of upward mobility for Black workers,” she noted. She also said that the nationwide dismantling of diversity, equity, and inclusion (DEI) initiatives may have resulted in Black people gaining fewer promotions or job opportunities.
There’s a need for more affordable housing, but permit requirements, tax rates, and a lack of space prevent it in many big cities. Cities in the West and South provide some glimmers of hope as home construction has ramped up. Bankrate said that there should be some slight relief for buyers in 2026 as mortgage rates are expected to drop from an average of 6.6% to 6.3%.
SEE ALSO:
Black First-Time Homebuyers Remain Committed To Ownership
Homeownership Pathway Trades Down Payments For Financial Literacy
Report Shows 75% Of US Homes Are Unaffordable For Average Buyer was originally published on newsone.com
