Despite low mortgage rates and higher wages, soaring house prices mean owning a home eats up more of our income than any time since 2008.
Someone making the median U.S. pay would have to shell out 32.1% of their income to afford the estimated annual cost of owning a median-priced home as of July, according to the most recent available data from the Atlanta Fed’s home affordability tracker. Since March that percentage has been above the benchmark of 30% that the government considers “affordable” for home ownership. It’s now at its highest level since 2008, although still nowhere near the peak the tracker recorded during the 2006 housing bubble, when the level hit 42%.
Home affordability isn’t just about home prices, which have been skyrocketing lately. It’s also about mortgage rates, which can have a huge impact on monthly payments, and which have been relatively low lately but are beginning to tick up. Affordability is also about wages—which have been rising this year amid a worker shortage, but not fast enough to keep up with inflation—in addition to a few other factors like property taxes and insurance costs.
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