While shelter is one of the fundamental human needs, a tight housing market means there are less homes available for middle-class homebuyers – even less so since at least 2019.
Last month, the United States’ 30-year fixed mortgage rate inched towards a record high of around 6%. This means that those earning around $100,000 a year – just a fraction over the national average – could just about buy a house worth $341,000.
As it happened, only 39% of homes put on the market in May 2023 were listed at that price or lower. This is seriously bad news as, in more economically stable times and given the current size of the American population, 64% of the homes offered on the market should be within the aforementioned price range.
Under current circumstances, the number of such listings within that range is at least 285,000 short.
Why Is This Happening?
Back in 2018, those earning just over the national average had an easier time, as both house prices and mortgages were pegged at substantially lower costs. Today, while there are still a lot of homes on the market, most of them are priced well beyond the budget of the average American homebuyer.
According to Danielle Hale, chief economist at Realtor.com, significantly higher home prices as well as the scarcity of available homes within the middle- and lower-cost ranges are keeping many prospective buyers from getting a home. Well, at least until things change for the better – a prospect that is highly unlikely at present.
As it stands, market conditions are driving buyers to build rather than buy – an option which was previously the more expensive of the two. Likewise, real estate firms have been offering incentives to homebuyers ranging from upgrades to temporary buydowns. But with more people opting to build, such offers are set to dwindling in the coming days.
