Homeownership slipping out of reach for many

With rates rising and house-price gains far outpacing wage growth, prospective homebuyers are being priced out of the market across the country

Homeownership slipping out of reach for many

Across the US, prospective homebuyers are being priced completely out of the market as home-price gains continue to outpace wage growth.

Home prices have risen nearly 60% since March 31, 2012, according to the S&P Corelogic Case-Shiller 20-City Composite Index. Meanwhile, household income has risen less than 30% in the same time frame. Rising mortgage rates are also pushing homes out of reach of many buyers; at the beginning of the year, the average rate for a 30-year fixed-rate mortgage was 3.85. Now it’s hovering around 4.74, and is expected to rise further, according to a Bloomberg report.

All of those factors are making homes less affordable, especially for first-time buyers, Bloomberg reported.

“Every single market in the country has an entry-level problem,” Candace Adams of Berkshire Hathaway HomeServices told Bloomberg.

Redfin reports that a buyer with a $2,500 monthly housing budget has lost nearly $30,000 in purchasing power this year alone – and conditions are even worse in more expensive metro areas.

In Orange County, Calif., more than 30% of homes are unaffordable to buyers with a $3,500 monthly housing budget. In San Jose, Calif., the number is nearly 40%, Bloomberg reported.

The price gains are hardest on entry-level buyers – but there’s a ripple effect all the way up the chain, Bloomberg reported. With rates rising and home prices outpacing wage growth, entry-level buyers are being priced out of the market. With entry-level buyers out of the picture, prospective move-up buyers have a harder time selling their homes, creating a slowdown from one end of the spectrum to the other.

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