Blog

It’s been a long time since buying a home has been this expensive for American consumers. Even though incomes have gone up, home prices have skyrocketed, especially after the COVID-19 pandemic. The first graph shows that while family incomes have grown, the price of homes has shot up even more. On top of that, mortgage rates have climbed steeply, making it harder for people to afford their monthly payments. This combination of higher home prices and rising mortgage rates has pushed housing affordability to its lowest point in decades.

The second graph paints an even clearer picture of how tough things have gotten. It shows how the total amount paid for a home with a 10% down payment, has become much harder to afford compared to median family incomes. In fact, the affordability gap is at levels we haven’t seen since 1985. The median single-family home now costs around $406,241. Assuming a 10% down payment and a 30-year fixed-rate mortgage close to 7%, the total payout over the life of the loan would be a staggering $902,736. With home prices and mortgage rates both rising fast, many people are finding it harder than ever to buy a home, even though they’re earning more than they used to.