Residential Real Estate Becomes Less Attainable for Ordinary Americans

Strategic Insights -

The state of the nation's housing, as described in the Joint Center for Housing Studies of Harvard University's report, reveals a concerning trend: residential real estate is becoming increasingly unaffordable for the average American. The median home price hit a new all-time high in 2024, standing at $412,500, making it difficult for individuals to afford a mortgage payment. The traditional lender ratio of 31% debt to income requires a borrower to have an annual income of at least $126,700 to afford a mortgage payment on a home of this price. As of 2023, only 6 million of the nation's nearly 46 million renters meet this benchmark.

Key Takeaways:

  • The median home price hit a new all-time high in 2024, reaching $412,500.
  • To afford a mortgage payment on a home of this price, a borrower needs an annual income of at least $126,700.
  • As of 2023, only 6 million of the nation's nearly 46 million renters can meet this benchmark.
  • The average rate on the popular 30-year fixed-rate mortgage has hovered just under 7% this year.
  • The cost of a median-priced home was five times greater than the median household income in 2024.
  • Going back to 1990, the only other period in which the ratio was this high was 2005, at the height of the subprime bubble.
  • A borrower would need an income of $595,389 to afford the median-priced home in the San Jose, California, metro area.
  • In Waterloo-Cedar Falls, Iowa, or Charleston, West Virginia, a typical home can be purchased for one-tenth the amount of the median-priced home in San Jose.
  • As of 2023, half of all renters are "cost-burdened" and spend more than 30% of their income on housing and utilities.
  • Zoning regulations, federal and state subsidies, and vouchers can help alleviate high costs.
  • The Harvard report highlights the human toll of cost burdens, with 771,480 people homeless in January 2024, a 33% increase since January 2020.

Statistics:

  • Median home price: $412,500 (2024)
  • Required annual income to afford a mortgage payment: $126,700 (2024)
  • Number of renters who can afford the benchmark: 6 million (2023)
  • Average rate on the popular 30-year fixed-rate mortgage: just under 7% (2024)
  • Cost of median-priced home vs. median household income: 5:1 ratio (2024)
  • Number of people homeless: 771,480 (January 2024)
  • Increase in homelessness since January 2020: 33%

Sources:

  • The State of the Nation's Housing 2025, Joint Center for Housing Studies of Harvard University
  • Reuters
  • Lawrence Yun, Chief Economist, National Association of Realtors
  • Whitney Airgood-Obrycki, Senior Research Associate, Harvard Joint Center for Housing Studies