It wasn’t too long ago that a $100,000 annual income was a celebrated milestone.
Not anymore – not in the era of high inflation and soaring prices.
DON'T MISS: Here's Where U.S. Homes Are Rising and Falling
Take the U.S. housing market, where home prices are really getting out of hand if you can find one.
A recent report noted that half of New York City residents “can’t afford to live” in the Big Apple. The study from the United Way of New York City stated the monthly cost of living in Southern Manhattan stood at $7,956 in mid-2023. The report also spotlighted the imbalance between income and costs.
“Since 2000, costs have increased 131% on average across the five New York City boroughs” for a family of two adults and two children. Meanwhile, “median earnings have only risen by 71%” over the same time period.
Another report from the National Association of Realtors showed the supply of American homes for sale is approximately 50% of available homes in the U.S.
Housing Crunch for Middle-Income Buyers
This from the NAR report:
- The U.S. housing market is missing about 320,000 home listings valued up to $256,000, the affordable price range for middle-income buyers (households earning up to $75,000).
- Middle-income buyers can afford to buy less than a quarter (23%) of listings in the current market. Five years ago, this income group could afford to buy half of all available homes.
The NAR study also highlights the uphill climb even a family with a $100,000 annual income faces in an increasingly out-of-reach housing market. At the $100,000 annual income level, that family could only afford a home that cost $341,000. Yet only 39% of all U.S. homes for sale were listed below the $341,000 price level, meaning even a six-figure income household may be locked out of homes their parents and grandparents could more easily afford.
"Ongoing high housing costs and the scarcity of available homes continue to present budget challenges for many prospective buyers, and it's likely keeping some buyers in the rental market or on the sidelines and delaying their purchase until conditions improve," stated Realtor.com Chief Economist Danielle Hale.
When the U.S. middle class can’t afford a decent home, the U.S. enters uncharted territory for tens of millions of its citizens. Right now, that picture doesn’t look bright.
"Even with the current level of listings, the housing affordability and shortage issues wouldn't be so severe if there were enough homes for all price ranges," said Nadia Evangelou, NAR senior economist and director of real estate research. "Our country needs to add at least two affordable homes for middle-income buyers for every home listed for upper-income buyers."
