This article, published by HousingWire, explains current trends and projections in the affordability of housing in the United States. Since the financial crisis of 2008, housing prices have increased steadily, while median household income has not kept pace. The result has been a decline in affordability over the past decade. This trend is expected to continue into 2022 and potentially beyond, resulting in a record-low in affordability.
Housing affordability is measured by comparing the cost of home ownership to the median income for all households. The National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) is one of the key gauges for this particular metric. The index ranges from 1 to 100, with a higher number indicating greater affordability. The national index for May 2019 was 52.8, representing a decline from a level of 60 in 2011.
The decline in housing affordability is expected to be compounded by the cost of home ownership. As demand has increased, home prices have risen faster than increases to median income, especially in areas with healthy job markets and population influxes. The NAHB projected home prices to increase at a 7.7% annual rate through 2021. Meanwhile, wages are expected to increase at lower rates.
In conclusion, the current trend of decreasing housing affordability is forecasted to continue through 2022 and potentially beyond. Homeownership costs are expected to rise faster than median income, resulting in significant burden on households seeking to own property. An understanding of this trend is important for those exploring home ownership in the current market.
You can read this full article at: https://www.housingwire.com/articles/housing-affordability-ends-2022-at-record-low/(subscription required)
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