U.S. Home Prices Far Outpace Paychecks: What’s Happening in Kansas City?
In nearly half of the metropolitan areas in the United States, potential home buyers would need to slash out over $100,000 to afford a median-priced home, according to a recent analysis.
All-Time High in Home Prices Against Unmoved Stagnant Salaries
The chances of securing a comfortable abode have become nearly impossible for millions of Americans as home purchase costs continually soar. The traditional three times annual income house cost has become a bygone notion. Since the outbreak of the COVID-19 pandemic, home prices have jacked up significantly, recording a staggering 47% growth since the early months of 2020.
The median home sales prices last year were roughly five times the median household income. There’s more ominous news ahead as this ratio is expected to worsen, according to a recent report by the Harvard Joint Center for Housing Studies. This grim housing inflation and escalating mortgage rates have barred homeownership to only the ‘most advantaged households’, as noted by Daniel McCue, a senior research associate at the Center.
Renters Too Bearing the Brunt
Alongside prospective house hunters, current homeowners are also weighed down by the inflation of property taxes and insurance rates. The comprehensive monthly expenditure for a median-priced home in the U.S. has reached its highest peak in over three decades, making it exceedingly difficult to bridge the racial gap in homeownership.
As homeowners are reluctant to sell and give up their lower mortgage rates, home sales have dwindled drastically. The previous year observed the lowest level of existing-home sales in nearly three decades- even lower than the immediate aftermath of the infamous 2008 housing crash.
Shooting up Rental Prices: An Inevitable Consequence
The current spike in home costs has pushed millions of citizens to settle for rental places, subsequently shooting up competition and prices in the rental market as well. Today, a whopping half of U.S. renters find their housing unaffordable.
The massive housing shortage that has built up over the past few decades is a significant underlying problem. This shortage is likely to take several years to rectify. A surge in multifamily construction has brought a temporary relief in rents, especially in sectors like Austin, Texas, where rental prices have hiked incredibly in recent years. Nevertheless, authors from the Harvard report warn that this respite is unlikely to last long.
If the demand for apartments continues to rise while the construction slowdown remains unaffected, it may induce a period of rapid rent inflation, worsening the already precarious condition of renter affordability.
Brief glimpse at Kansas City
Similar trends are observed in the city of Kansas City– often considered the heart of the U.S. Despite the financial uncertainties and shocks of the pandemic, home prices have been steadily rising in this midwestern city, significantly outpacing the growth in wages. This has created considerable tension for low- and middle-income households, making the dream of owning a home in Kansas City increasingly unattainable for many.
Conclusion
The escalating housing prices and stagnant wages have resulted in a widening affordability gap, making home ownership an increasingly difficult goal to achieve for many Americans. An effective solution is undoubtedly complex and multi-faceted, and will require innovative thinking and strong commitment at all levels of government and society.
