Home sales have boomed during the pandemic, but now a brutal market is making the American dream distant for most
Buying your dream house… is becoming a nightmare. Demand for mortgages hit a 22-year low last week, as more would-be buyers got squeezed out of a pricey market. Home sales have fallen for five months straight, as prospective buyers deal with a triple whammy of challenges:
- Ceiling costs: The median price for an existing home hit a record $416K in June. Blame low inventory.
- Roof rates: The cost of borrowing $$ for a mortgage has nearly doubled this year as the Fed hikes interest rates.
- Crowded lawns: The average house is on the market for just 14 days before it’s sold, the shortest cycle on record.
Not keeping up… Median incomes in the US have increased 14X since 1960 — but median home prices have soared 36X. The housing-affordability crisis accelerated during the pandemic as buyers ditch city rent for suburban mortgages — and priced out locals. And it’s getting worse:
- Long road: By the end of this year, it’ll take 11+ years for a first-time buyer with median income to save for a 10% down payment. Pre-pandemic, it took half as long.
- Broken system: The average US worker needs to pay about a third of their income to afford a median-priced home — the highest level since the ’07 housing bubble.
The picket fence is out of reach… Homeownership was once a cornerstone of the American dream; now it’s becoming inaccessible for average families. Homes became less affordable in 97% of the US last quarter (FYI: last month rent also jumped at its fastest pace since 1986). And while housing inventory is expected to increase in the coming months, experts say 60% of Americans won’t be able to afford starter homes through 2025, especially those in communities of color.