The American dream of home ownership is becoming increasingly out of reach for the middle and lower classes. Unfortunately, wages have not been able to keep pace with rising home prices and mortgage rates, causing many to be priced out of the housing market completely. Add in a tight inventory and a lack of affordable housing and the situation has gone from bad to worse.
A recent study by the National Association of Realtors® found that the median home price in the United States is now $375,000. This is up 17% from just one year ago. Meanwhile, the median household income in the United States is only $67,521. This means that a typical household would need to spend more than half of their income on a mortgage payment to afford a median-priced home.
Wage growth challenges
In addition to rising home prices, wages for middle-class workers have been stagnant for decades. This means that middle-class families are not able to save enough money for a down payment on a home. The median down payment for a home is now 20%, which is a significant financial burden for many middle-class families.
Of course, economic challenges can not be discussed without mentioning the record-high inflation that has been seen over the past several years. As a result of these higher prices for virtually all basic needs, this has put added pressure on families looking to get into the housing market.
The rising cost of housing is having a number of negative consequences for the middle class. It is making it difficult for middle-class families to build wealth. It is also making it difficult for middle-class families to stay in their communities.
There are a number of things that can be done to address the problem of the middle class being priced out of the housing market. These include:
- Increasing the supply of affordable housing
- Providing tax breaks for first-time homebuyers
- Investing in public transportation
Do you need assistance with navigating the current housing market? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download the free Florida Home Search app for your smartphone or tablet as well.