A new National Association of Realtors Research/Realtor.com research report underlines the challenges today’s homebuyers face in the U.S. Housing Market: record-high prices and record-low inventory.
The researchers analyzed housing affordability across income levels in the 100 largest metro areas of the US and compared affordability today versus pre-pandemic. Not surprisingly, housing has become less affordable to buy or rent. Some of the report’s highlights:
- Two-thirds of renters can’t afford to buy a home.
- Half of all renters pay more than 30 percent of their income in rent.
- Though they’ve ticked up lately, mortgage rates remain low. But favorable rates are more than canceled out by rising prices.
- While wages have increased by 12 percent since 2019, home prices have risen almost 30 percent since then. As a result, a typical home is $80,000 more costly than before the pandemic.
- Home prices continue to surge in many locations. As a result, buyers must spend a more significant percentage of their income on housing than in 2019.
- Housing inventory has dropped by 57 percent since 2019 and is now at record lows. The pandemic exacerbated the housing shortage that already existed pre-pandemic. The number of houses for sale plummeted from four million in 2007 to one million today—a record low.
- Limited availability has fueled multiple offers and bidding wars, pushing prices ever higher.
- Affordability for households in the $75,000-$100,000 income bracket dropped by seven percent. The hardest-hit group is potential homeowners with $50,000 to $75,000 incomes. With few entry-level homes available and prices rising rapidly, this group has been hit particularly hard. At higher income levels, buyers might have to compromise, but they’re less likely to be priced out of the market altogether.
All of this helps explain why many employees have taken advantage of pandemic-driven work from anywhere policies and moved to less-costly locations. Between sometimes dramatically lower housing costs and no commuting costs, they have effectively received a substantial raise. But as the report demonstrates, high prices and reduced availability are no longer limited to high-cost areas. As a result, the “double trouble” phenomenon will continue to be a headache for companies that relocate employees.