Thinking about buying a house in 2024? You might want to brace yourself financially.
According to a new study from the JPMorgan Chase Research Institute, first-time home buyers are facing significant hurdles due to the widening affordability gap. The findings, also reported by Realtor.com, indicate that typical home buyers are now spending 45% more on mortgage payments compared to 2019, with prices declared “historically low.”
The report points to price increases following the pandemic, along with rising interest rates, as major factors in the steep decline of affordable housing options.
A five-year overview from 2019 to 2024 illustrates a bleak situation for potential home buyers. The Federal Reserve Bank of St. Louis notes that home prices surged by 50% during this period.
On top of soaring prices, the hike in interest rates has nearly doubled mortgage costs.
Since 2019, typical monthly mortgage payments have risen by approximately $600, and although wages in America have seen a significant boost, they aren’t quite keeping up with these escalating costs.
This pessimistic outlook seems to be making buyers anxious. There’s been an accumulation of available housing, resulting in the median age of first-time buyers hitting all-time highs.
JPMorgan Chase reports that individuals aged 24 to 44 in the U.S. are spending an average of 58% of their monthly income on mortgages in 2024; this is a stark jump from just 30% for the same demographic in 2019.
The consequences of the growing affordability gap are felt not just in urban areas but also in the suburbs, small towns, and rural regions. Increased demand for housing after the pandemic has driven up prices in these smaller areas, where residents haven’t shared the same wage growth benefits seen in larger metro areas.
