Weekly Special | May 27, 2024

Numbers Expose Home Affordability Crisis

Most people who keep an eye on the housing market understand that the US is in the middle of a historic affordability crisis, as rents and home prices have surged over the past few years.

Today’s quick report reveals the numbers that median-priced-home buyers are facing today.

Somebody borrowing $400K to purchase a home near the median is going to have a monthly principal and interest payment of $2,667 which is 65% more than what they would have paid for the same loan in December 2020.

Another way to look at it is somebody who could have borrowed $400K in December 2020 would now have their budget reduced 39% for a $243K loan.

As severe as those changes are, they do not tell the whole story.

Consider somebody who “decided to wait” to buy a home in December 2020, what is their scenario today? Not only have rates changed, but so too have home prices.

The $400K from the past that only buys $243K today is shown below. The home at the top is what they could have purchased, the one below is the one they waited for.

 Betton Hill (32308): 2,510 sqft, 2/5 acre, brick siding  Settlers Creek (32303): 1,353 sqft, 1/5 acre, painted siding The buyer who waited is in 1/2 the home on less than 1/2 the lot, and living much further from the heart of town. What will this comparison look like four years from now?

The original one-page Weekly Special PDF is still available.