Rising home prices and soaring mortgage rates have pushed more than 2 million would-be home buyers out of the housing market over the past year, according to a new report.\u00a0<\/p>\n
The annual study by the Joint Center for Housing Studies at Harvard University, released Wednesday, found that elevated home prices priced 2.4 million aspiring homeowners out of the market between March 2022 and March 2023.<\/p>\n
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The median price for a home was $375,400 in March 2023, down slightly from $379,300 in March 2022, the researchers found. However, rising mortgage rates pushed monthly mortgage payments up 30% during that period, from $1,780 to $2,300.\u00a0<\/p>\n
Including property taxes and insurance on top of the mortgage payment, homeownership costs would be around $3,000 a month, they estimated. Covering that cost would require an annual income of $117,100, the Harvard researchers estimated.\u00a0<\/p>\n
That\u2019s a significant increase in homeownership costs compared to last year, when a household earning $97,400 could afford a median-priced home. <\/p>\n
The estimated income required to buy a median-priced home varies significantly between local real-estate markets, Harvard\u2019s interactive map revealed.<\/p>\n
\u201cAround the country, in about a third of all metros \u2026 you\u2019d need more than $100,000 a year to be able to afford monthly payments,\u201d Daniel McCue, senior research associate at the Joint Center for Housing Studies, said during a press briefing.<\/p>\n
At the top end, for instance, for a potential buyer looking to purchase a home in the San Jose-Sunnyvale-Santa Clara area of California, they would need to make at least $454,000 to afford a home, because the median price of a single-family home is over $1.6 million, according to data from Harvard.<\/p>\n
Those renting in the New York-Newark-Jersey City area would need to make at least $178,000 if they wanted to buy a typical home priced around $577,300.<\/p>\n
Comparatively, if a renter were interested in buying a home in Peoria, Ill., for instance, they would only need to make about $42,000, the Harvard data revealed, as the median home was only priced about $128,600.\u00a0<\/p>\n
The housing market has cooled considerably since the U.S. Federal Reserve hiked interest rates last year in an attempt to slow inflation in the American economy.\u00a0<\/p>\n
Mortgage rates doubled as a result, increasing housing costs for would-be buyers taking out new mortgages. Monthly payments on a median-priced home in the U.S. \u2014 including taxes and insurance \u2014 skyrocketed to $3,100 in October 2022 versus $2,200 in January, Harvard said. That was due to a sharp rise in mortgage rates to 6.9% from 3.4%.<\/p>\n
Applications for mortgages to purchase a home have dropped by nearly 35% in mid-June 2023 compared to last year, according to the Mortgage Bankers Association.<\/p>\n
And for aspiring homeowners, there\u2019s some more bad news: The Harvard report doesn\u2019t expect home prices to let up.<\/p>\n
\u201cIn the near term, home prices are unlikely to return to pre-pandemic levels, due largely to the low number of homes available for purchase,\u201d the report stated.\u00a0<\/p>\n
New listings of homes for sale are down 25% in May as compared to a year ago, according to a report by real-estate brokerage Redfin.\u00a0 There were only 1.4 million homes for sale in May, the company added, which is the lowest level since Redfin began tracking the data in 2012.<\/p>\n
There\u2019s little incentive for millions of homeowners to sell their home, given that 92% of them who have an outstanding mortgage have a rate below 6%, the company noted.<\/p>\n
And nearly two-thirds of outstanding mortgages carry an interest rate of less than 4%, Harvard added. One quarter of mortgages have a rate of sub-3%.<\/p>\n
In contrast, the 30-year was averaging at 6.73% in mid-June of this year.<\/p>\n
As a result, home \u201cprices are unlikely to plummet like they did during the Great Recession,\u201d the report stated, \u201cthanks to the combination of the strong job market, the continued aging of millennials into peak homebuying years, the dearth of housing available for purchase, and the low foreclosure rate.\u201d<\/p>\n
The U.S. is facing a shortage of at least 1.5 million housing units, Harvard said.<\/p>\n<\/p><\/div>\n
Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Rising home prices and soaring mortgage rates have pushed more than 2 million would-be home buyers out of the housing market over the past year, according to a new report.\u00a0 The annual study by the Joint Center for Housing Studies at Harvard University, released Wednesday, found that elevated home prices priced 2.4 million aspiring homeowners […]<\/p>\n","protected":false},"author":1,"featured_media":12060,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-25570","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"\n
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