Home "unaffordable" in 99% of the nation for the average American

The typical American cannot afford to buy a home in a growing number of communities across the United States, and there are no clear signs that conditions will improve anytime soon.

That’s the takeaway from a new one report released Thursday by real estate data provider ATTOM. Researchers at ATTOM examined average home prices last year for about 575 U.S. counties and found that 99% of those counties now have homes priced too far out of reach for the average American, who earns about $71,214 a year, according to the report.

Housing experts said a few trends explain why prices continue to rise. Interest rates on home loans rose over 7% this year, adding hundreds of dollars a month to a potential mortgage payment. Meanwhile, homeowners who locked into lower mortgage rates during the pandemic have opted not to sell their homes for fear of having to buy another house at today’s elevated interest rates.

High mortgage interest rates create a challenging climate for home buyers


“The only people selling right now are people who really need to move because of a life event — divorce, marriage, new baby, new job, etc.,” Daryl Fairweather, chief economist at Redfin, told CBS MoneyWatch . “This lack of new inventory is keeping prices high.”

The national median price for existing homes was $407,100, up 3.9% from a year ago, according to to the National Association of Estate Agents. The average interest rate on a 30-year mortgage was 7.19%, compared to 6.48% at the beginning of 2023. according to to Freddie Mac. Prices will remain unaffordable as long as mortgage rates continue to rise, Fairweather said.

“The dynamics affecting the U.S. housing market appear to be continuously working against ordinary Americans, potentially to the point where they could begin to have a significant impact on home prices,” Barber said in a statement Thursday. “We’ll see how this shakes out as the 2023 buying season winds down.”

Almost impossible for first time buyers

ATTOM’s data adds a growing body of real estate research in recent years, all of which conclude that it is almost impossible for house hunters to buy a property. It is a particularly tall task for younger millennial shopperssaid an expert.

“First-time homebuyers, who are often the most sensitive to interest rates, have had to put off their home-buying dreams,” Dan Hnatkovskyy, co-founder of homebuilding startup NewHomesMate, told CBS MoneyWatch. “The older buyers with more cash on hand can buy down the interest rate, or they can absorb a higher monthly payment and still buy homes across the country.”

ATTOM defined “unaffordable” as someone who needs more than 28% of their income to pay for a particular home. Factoring in a mortgage, homeowner’s insurance and property taxes, the typical house priced today would require 35% of a person’s annual salary, ATTOM said.

Cities with the most unaffordable housing include Los Angeles, Chicago, Phoenix, San Diego and Orange County, California, ATTOM said. Communities around Cleveland, Detroit, Houston, Philadelphia or Pittsburgh have the most affordable housing compared to median wages for residents there, ATTOM said.

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