Vast majority of U.S. homes are unaffordable to the average buyer (2024)

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Are vast majority of US homes unaffordable to the average buyer? ›

The real estate website analyzed homes that went on sale last year and found that only 21% of them were affordable, meaning that nearly 80% of homes were outside the typical buyer's budget. By comparison, about 60% of homes were considered affordable in 2021, the report released Friday found.

Strained affordability has seen many homebuilders turn to smaller units. The Pandemic Housing Boom, which pushed national home prices up over 40%, coupled with last year's mortgage rate shock, has resulted in a deterioration of housing affordability.

The US housing market is so unaffordable, over 75% of homes on the market are too expensive for middle class buyers, according to a recent report from the National Association of Realtors and Realtor.com. That's largely due to the shortage of housing supply, which has hit middle income buyers the hardest.

According to the 2023 International Housing Affordability Survey by Demographia, three out of the 10 least affordable housing markets are in Australia and New Zealand, two are in Canada and four more are located in the United States. The least affordable housing market is Hong Kong.

Lower Interest Rates

When interest rates decrease, the cost of financing a home goes down, and more aspiring homeowners are inclined to purchase property. This increase in demand almost always increases overall home prices.

According to worldpopulationreview.com, Hawaii is the most expensive state to live in, with its housing costing three times the national average. New York and California rank as the second and third most expensive states in which to live, respectively.

Nine months into 2022, only 18% of households could afford the state's median priced home, the California Association of Realtors reported. And the estimated minimum annual household income needed to buy a median priced home increased from $148,400 to $192,800 over that time period.

What problems arise when households struggle to afford housing? Unaffordable housing costs can force families to spend less on other basic necessities like health care or food, to cut costs by seeking lower-quality child care, and to under-invest in important long-term assets like education or retirement savings.

The imbalance between supply and demand; resulted from of strong economic growth creating hundreds of thousands of new jobs (which increases demand for housing) and the insufficient construction of new housing units to provide enough supply to meet the demand.

Nationwide, about 27.4% of homeowners — or more than a quarter — fall into the “house poor” category, according to the data. “Overall, 21% of cost-burdened homeowners have a household income of less than $75,000,” the report states.

Are the majority of Americans homeowners? ›

65.8 percent of all Americans live in their own home as of 2022 that's about 230 Million Americans.

At a state level, Hawaii, South Carolina and North Carolina were the most overvalued housing markets, Fitch said.

The highest percentage of single female buyers was among Gen Z at 31%. The highest share of unmarried couples were Younger Millennials at 20%. 31% of all buyers had children under the age of 18 living at home. Seventy percent of Older Millennials had at least one child under the age of 18 residing in the home.