Published by REALTOR Magazine | June 8, 2023
Today’s homebuyers are learning that finding a move-in ready home in a good location that they can comfortably afford is about as rare as a winning Powerball ticket.
A dire housing shortage has kept prices strong and competition fierce among buyers despite high mortgage interest rates. That’s left less than a quarter of the roughly 1.1 million home listings within financial reach of the typical American household, according to a recent joint report from the National Association of Realtors® and Realtor.com®.
The housing market is short about 320,000 listings within the price range of buyers earning the median household income of $75,000 a year. These buyers can generally afford homes up to $256,000. (Listings for single-family homes, condos, townhomes, row homes, and co-ops included only existing homes and did not encompass new construction.)
“The country has the largest shortage of homes in the price range that middle-income buyers can afford,” says NAR Senior Economist Nadia Evangelou. “That can explain why the competition is strongest for these homes.
“We hear again and again that in order to address the housing affordability issue we need to add more housing to the market,” she adds. “We need to add more homes that middle-income buyers can afford.”
Even those making $100,000 can afford only about 38.6% of the homes on the market. And those needing mortgages are faced with rates nearing 7% for 30-year fixed loans, pushing monthly mortgage payments up into the stratosphere.
The problem has worsened significantly over the past five years. In 2018, there were about 810,000 homes on the market that middle-income buyers could afford. That’s compared with nearly 263,000 in April of this year.
