The U.S. is experiencing a record decline in housing affordability. The market crash is occurring across all age groups, reports Fox Business, citing data from the Federal Reserve Bank of New York and the Housing Center of the American Enterprise Institute (AEI).
Home Out of Reach
According to AEI calculations, in 2003 the average home price exceeded the annual household income by 4.3 times. By 2017, this gap had grown to 5.1 times, and by today it has reached nearly six times.
From 2000 to 2022, the share of homeowners decreased by 8–10% across all age groups.
Among those just starting their independent lives and earning between $50,000 and $75,000 a year, only 25% owned their own homes in 2022. Meanwhile, among households with incomes of $175,000 or more, this figure was 70–80%.
Renting Instead of Buying
As reported by Fox Business, the key issue in acquiring real estate is not so much the high mortgage rates, but the enormous gap between American incomes and actual home prices.
Many buyers are forced to rely on financial assistance from relatives to cover the shortfall. Some families are giving up plans to have more children due to a lack of space in their current homes.
Co-director of the AEI Housing Center Ed Pinto warns that the current trend is leading to the formation of a sustainable class of renters among those who have not yet reached a high level of wealth. As long as prices remain at their current levels and incomes grow by only 3% per year, low- and middle-income families risk being without their own homes for many years.
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