Middle Class Priced Out Of Homeownership Across America

The American dream of owning a home is increasingly out of reach for middle-class families. Creditnews Research has issued a report showing that middle-class households can only afford to purchase homes in 52 of the top 100 U.S. metros this year — a sharp decline from 91 metros just five years ago. For households classified as lower middle class, affordable housing is available in only seven of the top 100.

The research reveals that unless a household earns over $100,000 annually the possibility of homeownership in 41 of these top metros is simply out of reach. In cities like San Jose and San Francisco, the required income soars beyond $300,000, making these areas almost exclusively available to the wealthiest purchasers.

Citing increased mortgage rates and diminished inventory, the study found: “There’s no two ways about it: Housing affordability has worsened significantly since Covid.” Ali Wolf, the chief economist at Zonda, underscores the changing reality: “In the past, if you were middle class, it was almost assumed you would become a homeowner. Today, the aspiration is still there, but it is a lot more difficult.”

Economists and analysts are calling attention to the sharp rise in mortgage rates, which, following a brief dip, are climbing once again, nearing the 7% mark as per Freddie Mac’s latest data. Rising mortgage rates and persistent consumer price inflation for essential goods and energy are expected to maintain upward pressure on home prices, even as demand withers.

The geographic disparities in housing affordability are stark. The most unaffordable metros remain concentrated on the West Coast — particularly in California and Hawaii — while the most affordable areas are found in the Midwest and parts of Texas.

The conservative approach to this crisis often emphasizes the need for regulatory reform and enhanced market efficiency rather than direct governmental intervention. The ongoing affordability crisis underscores the necessity for thoughtful economic policies that address supply and demand factors in the housing market. While politically unlikely, significant reform of the Fed could go a long way to stabilizing interest rates and prices. A more realistic short-term goal should be removing the oppressive regulatory barriers that are stifling the development of new housing in areas where demand is greatest.

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