The Housing Affordability Crisis: How Homeownership is Becoming a Luxury

🏠Housing affordability is defined as paying no more than 30% of your household income towards housing. Anything above 30% is considered unaffordable.

💰US home prices have risen and the 30-year fixed mortgage rate is at a new high, making homeownership even more unaffordable.

📉To bring housing affordability back to its 25-year average, home prices would need to decline by up to 28% or household incomes would need to grow by up to 60%.

🛠️Low housing inventory and high construction costs contribute to the lack of affordable housing options.

💳High levels of credit card debt and declining savings rates make it difficult for households to afford homeownership.

What is considered affordable when it comes to housing?

—Paying no more than 30% of your household income towards housing is considered affordable.

Why are home prices and mortgage rates on the rise?

—Rising demand and low housing inventory contribute to the increase in home prices. Mortgage rates are influenced by various economic factors.

Can the housing affordability crisis be solved?

—Bringing housing affordability back to its average requires significant changes in home prices and household incomes, which is unlikely to happen soon.

Why is there a shortage of affordable housing options?

—Low housing inventory and high construction costs make it difficult to meet the demand for affordable housing.

How does credit card debt impact housing affordability?

—High levels of credit card debt can limit a household's ability to afford homeownership due to increased monthly expenses.

00:03Housing affordability is a luxury for first-time homebuyers.

00:25US home prices have increased by 3% year-over-year.

01:03The average house payment has increased by 8.5% to $2,666 per month.

01:39Housing affordability is at its worst since 1984.

02:39Bringing housing affordability back to its average requires significant changes in home prices or household incomes.