Homebuyers need to earn 80% more than in 2020 to afford a house in this market. Its not just due to high mortgage rates
Factors beyond high mortgage rates are affecting housing affordability for many Americans, according to experts.
The connection between housing costs and wages has been gradually separating over the years, according to C. Kirabo Jackson, an economist and member of the White House Council of Economic Advisers.
Similarly, the number of new housing units built throughout the years has been declining, and the low supply is rooted in restrictive land-use and zoning regulations, according to experts.
Factors beyond high mortgage rates are affecting housing affordability for many Americans, according to experts. Almost four years ago, a household earning $59,000 annually could afford a new mortgage without spending more than 30% of their monthly income and with a 10% down payment, according to a recent report by Zillow Group.
That is no longer the case today. While the typical household in 2024 makes about $81,000 a year, up from $66,000 in 2020, wages have not kept up with housing costs. Since January of 2020, the typical mortgage payment on the typical home in the U.S. has nearly doubled, said Orphe Divounguy, a senior economist at Zillow. Nowadays, potential homebuyers need to make about $106,500 a year in order to afford the typical home today, an 80% increase from January 2020, according to Zillow.