It’s becoming harder and harder to afford a home, according to real estate data provider ATTOM. Their recent report reveals that the average American can’t afford to buy a home in most communities across the country. Researchers examined median home prices in 575 US counties for 2022 and discovered that 99% of these prices were beyond the reach of the average income earner, who makes $71,214 per year. An affordable home, according to ATTOM, is one that doesn’t require a person to spend more than 28% of their annual income on major expenses such as the mortgage payment, insurance, and property taxes. Currently, the typical home costs 34.6% of the average annual wage, the highest since 2007.
One of the major reasons for this affordability crisis is the record-high mortgage rates. According to CNN, mortgage rates recently hit their highest level in nearly 23 years. The average 30-year fixed-rate mortgage is now at 7.31%, up from 7.19% the previous week and significantly higher than the 6.70% rate from a year ago. As a result, homeowners are holding onto their properties, unwilling to make a new purchase at the higher rates, which leads to fewer homes available on the market. Danielle Hale, chief economist at Realtor.com, predicts that if mortgage rates continue to climb, homes will become even more unaffordable. This year, there is a possibility of another rate hike, as revised economic projections indicate.
ATTOM CEO Rob Barber states that the high cost of homeownership, which now absorbs over a third of average pay, may price potential buyers out of the market. This reduction in demand could ultimately lessen the upward pressure on home prices. According to the ATTOM report, some of the communities with the most unaffordable homes relative to residents’ average salaries are Los Angeles, Chicago, Phoenix, San Diego, and Orange County, California. On the other hand, Cleveland, Detroit, Houston, Philadelphia, and Pittsburgh have more affordable homes. As of August, the national median home price was $407,100, a 3.9% increase from the previous year.
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