Posted on 03/29/2024 5:03:43 AM PDT by george76
The cost to afford a median-priced home has increased at twice the rate that the average household income has risen as inflation and high interest rates inflame housing expenses, according to Redfin.
The median monthly home payment in February was $2,838, up 12% year-over-year, while the median household income was just $84,072, an increase of 6% over the last year, according to Redfin. Over the past decade, the income needed to afford a home has tracked closely with the median household income until around the start of 2022, when the amount of household income needed skyrocketed to its current median of $113,520 a year, as inflation, supply constraints, and high mortgage rates all raised costs.
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Housing prices have moderated slightly since their all-time high in October, when the average rate for a 30-year mortgage neared 8%, but still remain high with mortgage rates slightly under 7%, according to the Federal Reserve Bank of St. Louis. When mortgage rates were at their recent peak in October, the median monthly house payment was $3,021, according to Redfin.
“For over a decade, America has been slowly marching toward a housing affordability crisis due to chronic underbuilding, and that crisis was kicked into overdrive when the pandemic homebuying boom fueled a meteoric rise in housing prices,” Elijah de la Campa, senior economist at Redfin, said in the report. “Now there’s another culprit squeezing homebuyers: elevated mortgage rates. We’re slowly climbing our way out of an affordability hole, but we have a long way to go. Rates have come down from their peak, and are expected to fall again by the end of the year, which should make homebuying a little more affordable and incentivize buyers to come off the sidelines.”
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Home prices alone have risen far higher than the rate of general inflation, with the Case-Shiller National Home Price Index increasing 6.0% in January year-over-year, up from 5.6% in December. Inflation has continued to remain elevated, most recently rising 3.2% in February, far higher than the Federal Reserve’s target of 2%.
In an attempt to tame inflation, the Fed set its federal funds rate to a range of 5.25% and 5.50%, the highest range in 23 years, which has put upward pressure on interest rates across the economy, particularly mortgage rates.
And that is only two variables.
One could get a job sans college degree and get merit based promotions.
What’s the cost of university now?
Internet and smartphone is necessary for anyone with a decent career.
What is a decent car now v then?
Have you seen what a truck costs?
It continues on.
Goodness, “are necessary”…
The biggest variable on housing—larger than inflation, larger than interest rates—is location.
High cost areas are now four to five times more expensive in housing costs than low cost areas.
Anyone who can figure out how to make a decent living in a low cost area has a huge advantage.
Remote work makes this doable for many folks.
Remote work is the only positive thing I can think of that has happened for competent workers in my life.
Price per square foot? Average size growth of houses.
It will if investors are buying them. I hear the cash offer stories frequyandy yet I no one I know has a half mil in cash.
This is clearly by design. Just like Covid
It will be another power grab or a return to outright feudalism. Or both.
They meant it when they said you will own nothing.
Feels like feudalism. When folks wake up, it will be too late.
These homes are being snapped up by investors.
In my area of the world there is a bunch of homes for sale and prices are still rising.
Planned.
In my neighborhood they are selling homes as fast as they can build them. Starter homes that were $300K three years ago are now $500K.
They are being bought by people move here (NM) from out of state. Real estate is still cheap here compared to the west coast, Florida and New York.
If your company relocates you, which often seems to be the case, and you have to sell your California home for $1.2 million, like my buddy did (2000 SF, 3 BR, 2 BT, 1/4 acre lot) and you had lived in it for 20 years and had bought it relatively cheap back then, buying a $500K 2500 SF home is a bargain. You pay cash, have no mortgage, and only pay the property tax and insurance which aren’t that bad here in New Mexico.
Geez, how much is Vivek paying you?
That is about the only cost that has kept pace with home prices, I guess. In fact, maybe quite a bit worse around here.
I am independently wealthy. I take money from no one. I seen all the candidates in debates and interviews. Vivek seems to be the only one capable of changing USA for better, for all people, based on meritocracy, not equal opportunity socialism.
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