Less than half of all homes sold are affordable for middle-class Americans, and fast-rising mortgage rates are pushing that share even lower. Just 48.7% of homes sold fall within the budgets of middle-class buyers, but each time mortgage rates rise by even a quarter of a percentage point, an additional 1.3 million households are priced out of homeownership, Realtor.com reports.
In Lansing, Michigan, roughly 92.3% of middle-class locals could afford home purchases with the median home list price of $190,000, making the Michigan capital one of the most affordable housing markets in the U.S. On the contrary, California metros like Los Angeles, Anaheim, and San Francisco are the least affordable markets for middle-class buyers with median home price tags of $950,000, $950,000, and $1,098,000, respectively.
“Housing affordability is going to be an issue in this country for the foreseeable future because we expect mortgage interest rates to continue to rise,” says Rose Quint, assistant vice president of survey research at NAHB. “There are going to be many buyers, particularly first-time homebuyers, who will be priced out of the market because of the increases in mortgage rates and also the increases in down payments based on the very quickly rising home prices.”
“Housing regulations make building houses in California very difficult. That lower supply of housing drives up prices and harms housing affordability,” says Quint. “If you have very strong population growth and very limited inventory, it’s going to remain very challenging to buy homes.”
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