- Homes aren’t as affordable or available for six-figure earners as they were two years ago, per NAR.
- Home prices are up, inventory is down, and the share of houses affordable on a $100,000 salary keeps shrinking.
- A $100,000 paycheck is now considered middle class in a housing crisis era.
A six-figure salary is no longer enough to buy a home. Not really.
Availability and affordability for households earning $100,000 has dropped since 2019, the National Association of Realtors (NAR) reported. Home prices shot up by 13% year-over-year in October while housing inventory fell by 12% in the same time frame.
“Due to weaker affordability and lower inventory, there are 503,000 fewer homes available for sale that this household can currently afford to buy compared to two years ago,” Nadia Evangelou, NAR’s senior economist and director of forecasting, wrote in a blog post. That’s a huge drop, as the number was 348,800 as of October 2021. That means more than half the houses that $100,000 earner could afford are off the market.
Home prices have been going up for years, at a steeper rate than they did ahead of the Great Recession. By 2018, first-time buyers were paying 39% more than first-time buyers did at the same age nearly 40 years ago. The pandemic housing crisis, marked by a historic housing shortage, only exacerbated the situation.
There have been 20 times fewer homes built in the past decade than in any decade as far back as the 1960s, Daryl Fairweather, chief economist at Redfin, told Insider back in April. It was no match for pandemic demand: as citygoers flocked to the suburbs in hopes of buying more space during the pandemic, America began running out of houses.
Video: Housing market might slow but there’s still ‘a multi-year shortage of houses,’ expert explains (Yahoo! Finance)
A lumber shortage didn’t help matters, as Americans bought more new houses than the lumber industry could keep up with and skyrocketing lumber costs were passed down to homebuyers. Coupled with the lack of inventory, it pushed the national median home sale upwards before reaching a record high of $386,888 in June.
$100,000 is no longer what it used to be
The price of houses isn’t the only thing that’s soared. The cost of living has increased for practically everything, from college tuition to health care. Income increases simply have not kept up with the exponential increase in living costs, and the …….