“Mansion Global” host Katrina Campins talks about the state of the housing market on “Making Money.”
Rising mortgage rates and home prices have put homeownership out of reach for millions of Americans, and the home affordability crisis continues to deepen.
Since the beginning of 2020, home prices have A surge of over 47% This is the fastest growth rate since the financial crisis more than a decade ago.
Before the COVID-19 pandemic began, home prices were typically about three times a buyer’s annual income, but that ratio has risen sharply in recent years, according to a new report from Harvard University’s Joint Center for Housing Studies.
The median home sale price last year was nearly five times the median household income, “making homeownership even more out of reach for millions of potential buyers by 2024,” the report said.
To buy a home in nearly half of U.S. metropolitan areas, you now need an annual income of at least $100,000 to afford the median-priced home, marking a significant increase from 2021, when that was the case in just 11% of markets.
There are a variety of driving forces behind the rise in house prices.
Mortgage calculator: See how much rising interest rates will cost you
Years of under-construction created a nationwide housing shortage, a problem that was then exacerbated by soaring mortgage rates and the cost of construction materials.
Rising mortgage rates over the past three years are also creating a “golden handcuff” effect on the housing market: Sellers who locked in record-low mortgage rates of less than 3% at the start of the pandemic are becoming reluctant to sell, further restricting supply and leaving eager would-be buyers with few options.
Homes for sale in San Jose, California, United States on Wednesday, February 7, 2024. (Photographer: Lauren Elliott/Bloomberg via Getty Images/Getty Images)
Economists predict mortgage rates will remain high for most of 2024, then Federal Reserve Still, interest rates are unlikely to return to the lows seen during the pandemic, and investors expect only one or two rate cuts this year.
Mortgage buyer Freddie Mac said Thursday Average interest rate for a 30-year loan It fell slightly this week to 6.95%, down from a fall peak of 7.79% but still significantly higher than its pandemic-era low of just 3%.
Click here to get FOX Business on the go
The supply of homes available for sale remains an astonishing 34.3% down from normal levels before the COVID-19 pandemic began in early 2020, according to a separate report from Realtor.com.
A majority of homeowners say they would be nearly twice as willing to sell their home if their mortgage interest rate was 5 percent or higher, according to a Zillow survey. Currently, about 80 percent of mortgage holders have interest rates below 5 percent.
