Home Affordability Plummets for Middle-Class Americans

The dream of homeownership is becoming increasingly out of reach for middle-class Americans, according to a recent study. The analysis shows that households earning $75,000 annually can now afford only one in five homes currently on the market. This represents a dramatic decrease in affordability compared to the pre-pandemic era, when approximately 50% of listed homes were within their budget.

Several factors contribute to this concerning trend. Rising home prices, driven by high demand and limited inventory, play a significant role. Interest rate hikes by the Federal Reserve have also made mortgages more expensive, further squeezing affordability. Inflation, affecting everyday expenses, also makes it more difficult for families to save for a down payment and qualify for a mortgage.

Experts warn that this decline in affordability could have long-term consequences for the housing market and the overall economy. It could lead to a decrease in homeownership rates, particularly among younger generations, and widen the wealth gap. Addressing this issue requires a multi-pronged approach, including increasing housing supply, exploring policies that support first-time homebuyers, and addressing the underlying economic factors driving inflation and interest rates.