Homeownership Becoming Increasingly Unattainable as Price Growth Continues To Break Records Monthly

Back view of hugging couple standing with real estate agent in front of house for sale.
KatarzynaBialasiewicz / iStock.com

Record growth in home prices is keeping homeownership out of reach for many Americans, despite low interest rates. According to the most recent S&P Corelogic Case-Shiller index, there was a record high 19.7% annual home price gain in July,  up from 18.7% in June and 16.9% in May.

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“July 2021 is the fourth consecutive month in which the growth rate of housing prices set a record, said Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. ” The last several months have been extraordinary not only in the level of price gains, but in the consistency of gains across the country.”

To cover mortgage payments on a median-sized home, the Federal Reserve Bank of Atlanta estimates that the average American household would need 32.1% of its income to cover mortgage payments, the Wall Street Journal reported. This is the most since November 2008.

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WSJ also noted that a decline in affordability will have the biggest impact on first-time homebuyers, who may have to make larger monthly mortgage payments, buy a less desirable home or back out of the market altogether.

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“Any affordability that mortgage rates lended has pretty much been erased at this point,” Daryl Fairweather, chief economist at real-estate brokerage Redfin told WSJ.

Conversely: Zillow Finds 2M Renters Can Afford to Buy Homes Thanks to Remote Work During COVID-19 Pandemic
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Pricier homes are making it difficult for buyers to compete. Only 29% of Americans surveyed by the University of Michigan’s Surveys of Consumers in September answered that now is a good time to buy a home, as previously reported by GOBankingRates. This is the smallest share since 1982 — which was nearly 40 years ago.

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Last updated: October 5, 2021

About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.

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