Record growth in home prices is keeping homeownership out of reach for many Americans, despite low interest rates. According to the most recent S&P Corelogic Case-Shiller index, there was a record high 19.7% annual home price gain in July, up from 18.7% in June and 16.9% in May.
By Josephine Nesbit
See: What Homes Will Be Worth in Your State by the End of 2021Find: What the Average Home Price Today Could Buy the Year You Were Born
“July 2021 is the fourth consecutive month in which the growth rate of housing prices set a record, said Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. ” The last several months have been extraordinary not only in the level of price gains, but in the consistency of gains across the country.”
To cover mortgage payments on a median-sized home, the Federal Reserve Bank of Atlanta estimates that the average American household would need 32.1% of its income to cover mortgage payments, the Wall Street Journal reported. This is the most since November 2008.
WSJ also noted that a decline in affordability will have the biggest impact on first-time homebuyers, who may have to make larger monthly mortgage payments, buy a less desirable home or back out of the market altogether.
“Any affordability that mortgage rates lended has pretty much been erased at this point,” Daryl Fairweather, chief economist at real-estate brokerage Redfin told WSJ.
Conversely: Zillow Finds 2M Renters Can Afford to Buy Homes Thanks to Remote Work During COVID-19 PandemicLearn: Selling Your Home? These Are the Upgrades Buyers Actually Want
Last updated: October 5, 2021
