This is the least affordable housing market since 1984. It’s getting worse | CNN Business
This is the least affordable housing market since 1984. It’s getting worse CNN
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The Unaffordability of America’s Housing Market
New York – CNN
The last time America’s housing market was this unaffordable, Ronald Reagan was in the White House.
It now takes nearly 41% of the median household’s monthly income to cover the principal and interest payments on a median-priced home, according to research from Intercontinental Exchange. It comes at a time of uncomfortably high prices after a bout with the worst inflation in a generation. Housing is eating up a bigger portion of paychecks as gas, groceries and other loan prices are sky high.
Housing now takes up the biggest chunk of paychecks since 1984, according to ICE, the owner of the New York Stock Exchange. That’s up 0.4% from last month’s report, which also showed America’s homes were at the least affordable level in 39 years.
The portion of households’ paychecks needed to pay for housing has surged in the past few decades. Over the past 35 years, this metric averaged less than 25%.
Wannabe homebuyers are getting hammered by a painful combination of high mortgage rates and high home prices. The one-two punch has pushed the principal and interest payment needed to buy a median-priced home up by $144 over just the past month alone, according to ICE. For the first time, monthly payments are above $2,500 – and that doesn’t even include taxes, insurance or other fees.
“The situation was already dire,” Andy Walden, ICE’s vice president of enterprise research said in the report, adding that the recent jump in mortgage rates has made it even worse.
This problem is pushing the American dream further from reach for some prospective first-time homebuyers. They’ve been forced to rent instead, delaying their ability to build wealth through homeownership.
Turmoil in the bond market and the Federal Reserve’s war on inflation have driven up mortgage rates to levels unseen since 2000.
After seven consecutive weekly increases, the 30-year fixed rate mortgage dipped to an average of 7.76% in the week ending November 2, according to Freddie Mac.
That’s miles away from the pre-Covid rate of 3.8% in the fall of 2019. Aided by emergency action from the Fed, mortgage rates briefly tumbled below 2.7% in late 2020 and early 2021.
The higher mortgage rates go, the less home people can afford.
At today’s rates, monthly payments on a $500,000 home would stand at roughly $3,265 after putting 20% down.
That’s $1,165 more than two years ago, when mortgage rates were barely above 3%.
Despite high borrowing costs, home prices continue to rise amid a supply crunch.
SDGs, Targets, and Indicators
1. Which SDGs are addressed or connected to the issues highlighted in the article?
- SDG 1: No Poverty
- SDG 8: Decent Work and Economic Growth
- SDG 11: Sustainable Cities and Communities
2. What specific targets under those SDGs can be identified based on the article’s content?
- SDG 1.4: By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership, and control over land and other forms of property, inheritance, natural resources, appropriate new technology, and financial services, including microfinance.
- SDG 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries.
- SDG 11.1: By 2030, ensure access for all to adequate, safe, and affordable housing and basic services and upgrade slums.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
- Percentage of median household income required to cover the principal and interest payments on a median-priced home.
- Average mortgage rates.
- Price-to-income ratio of homes.
Table: SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 1: No Poverty | SDG 1.4: By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership, and control over land and other forms of property, inheritance, natural resources, appropriate new technology, and financial services, including microfinance. | Percentage of median household income required to cover the principal and interest payments on a median-priced home. |
| SDG 8: Decent Work and Economic Growth | SDG 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries. | Average mortgage rates. |
| SDG 11: Sustainable Cities and Communities | SDG 11.1: By 2030, ensure access for all to adequate, safe, and affordable housing and basic services and upgrade slums. | Price-to-income ratio of homes. |
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Source: cnn.com
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