Housing prices spiking in the US: CBS
3 Min Read
Rising home prices and surging mortgage rates have made homeownership an unattainable dream for the average American.
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Tents housing people experiencing homelessness are set up on a vacant parking lot in Portland, Oregon, Dec. 8, 2020 (AP)
The prospect of owning a home in America is slipping away for the average American, as soaring home prices and rising mortgage rates push the American Dream further out of reach, a recent report by CBS News shows.
According to real estate data provider ATTOM, 99% of US counties now have median home prices that exceed the means of the average income earner, who typically makes $71,214 a year.
Housing experts point to a confluence of factors driving up housing costs. Many existing homeowners, who secured lower mortgage rates during the pandemic, are holding onto their properties, fearing they would have to purchase another at today's elevated rates. This reluctance to sell has contributed to a dwindling supply of homes for sale.
"The only people who are selling right now are people who really need to move because of a life event — divorce, marriage, new baby, new job, etc. That lack of new inventory is keeping prices high," Daryl Fairweather, chief economist of Redfin, explains.
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As of August, the national median existing home price reached $407,100, marking a 3.9% increase from the previous year, according to the National Association of Realtors.
Meanwhile, the average interest rate on a 30-year home loan climbed to 7.19%, up from 6.48% at the beginning of 2023, according to Freddie Mac.
"The dynamics influencing the US housing market appear to continuously work against everyday Americans, potentially to the point where they could start to have a significant impact on home prices," commented ATTOM CEO Rob Barber.
This trend presents a formidable challenge for first-time homebuyers, particularly younger millennials. Dan Hnatkovskyy, co-founder of new home construction startup NewHomesMate, noted, "First-time homebuyers, who are often the most sensitive to interest rates, have had to postpone their home-buying dreams."
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ATTOM's report defines "unaffordable" as situations where individuals must allocate more than 28% of their income to housing. Factoring in mortgage payments, homeowners' insurance, and property taxes, today's typical home would require a staggering 35% of an individual's annual wages.
Cities with the most unaffordable homes include Los Angeles, Chicago, Phoenix, San Diego, and Orange County, California, according to ATTOM.
Conversely, communities surrounding Cleveland, Detroit, Houston, Philadelphia, or Pittsburgh boast the most affordable homes relative to median resident salaries.
