That's Bidenomics: Americans Now Need Record Incomes to Afford Homes
According to a blistering new report from a prominent real estate company, the current economy under President Joe Biden’s administration has created an untenable environment for prospective homeowners.
Redfin, a Seattle-based real estate firm, put out the report on Monday and it paints a grim economic picture on several levels.
In short, sky-high mortgage rates and home prices are pricing out a good number of Americans — by a fairly large monetary figure.
According to the report, homebuyers “must earn $114,627 to afford the median-priced U.S. home, up 15% ($15,285) from a year ago and up more than 50% since the start of the pandemic.”
(In Redfin’s parlance, an “affordable” home is one where a homeowner does not spend more than 30 percent of their monthly income on a mortgage payment.)
That “average” salary of $114,627 needed to purchase a home is “the highest annual income necessary to afford a home on record.”
As Redfin broke down the numbers, it highlighted just how expensive day-to-day living in Biden’s America was becoming.
One big problem? The curious tug and pull of supply and demand that is currently shaking up the housing market.
Redfin notes that “even though soaring mortgage rates have dampened demand, low inventory is causing home prices to increase.”
Chen Zhao, the Redfin economics research lead, attempted to explain this peculiar phenomenon.
“In a homebuyer’s ideal world, rising mortgage rates would push demand and home prices down enough to make up for high-interest payments. But that’s not what’s happening now: Although new listings are ticking up slightly, inventory is still near record lows as homeowners hang onto their low mortgage rates — and that’s propping up prices,” said Zhao.
This strange but explainable phenomena is being described by market experts as a “reverse crash.”
The Mortgage Reports used that term to describe the housing market in August, and noted that factors apart from the economy could all be playing a role as well, such as construction challenges, demographic patterns and lending issues with banks.
Given all that uncertainty, Zhao also offered the following suggestion for prospective homeowners: “Buyers — particularly first-timers — who are committed to getting into a home now should think outside the box.
“Consider a condo or townhouse, which are less expensive than a single-family home, and/or consider moving to a more affordable part of the country, or a more affordable suburb.”
All of those increasing prices obviously have had a tangible effect on mortgage payments, as well.
“The typical U.S. homebuyer’s monthly mortgage payment is $2,866, an all-time high,” the report pointed out. “That’s up 20% from $2,395 a year earlier, and by that time payments had already increased substantially from the beginning of the pandemic, a time of ultra-low mortgage rates and yet-to-skyrocket home prices.”
But the most sobering part of this report stemmed from the simple math of it: Salaries need to be at around $114,000 to purchase a home. The average salary in the country is nowhere near that.
“The typical American household earns about $40,000 less than the income needed to buy a median-priced home,” the report said. “The median household income was roughly $75,000 in 2022, the most recent year for which annual income data is available.
“Hourly wages have risen in 2023, but not nearly as fast as the income necessary to afford a home is rising: The average U.S. hourly wage has increased by about 5% over the last year.”
Much to the dismay of any potential home buyers, future prospects don’t exactly paint a rosy picture.
“You’re not going to see house prices decline,” Rick Arvielo, head of mortgage firm New American Funding, said in a Bankrate report from this month. “There’s just not enough inventory.”
With soaring home prices and wages that are failing to keep pace, the American dream of owning a home has never seemed more nightmarish.
Truth and Accuracy
We are committed to truth and accuracy in all of our journalism. Read our editorial standards.
Advertise with The Western Journal and reach millions of highly engaged readers, while supporting our work. Advertise Today.
