Homeownership Becomes Unaffordable in Many U.S. Counties
It’s not just the exclusive neighborhoods of Beverly Hills or Cape Cod where buying a home has become an impossible dream for most people. With soaring home prices and stagnant wages, many locals are finding it increasingly difficult to enter the housing market. Personal finance site MoneyGeek conducted an analysis of real estate costs in metropolitan areas across the country and compared them to changes in income between 2021 and 2023. They identified 57 counties where homeownership has recently become unaffordable for the average family. Unsurprisingly, California is well-represented on this list.
Affordability Crisis Spreads in California
New additions to the list include the exurbs of San Francisco and several counties in the Sacramento area. As people have been priced out of the core Bay Area, they have sought refuge in other Northern California locations. However, this influx has caused home prices to skyrocket in places like Placer, Solano, and San Joaquin counties, making them unaffordable for many residents.
The West Coast’s Affordability Crisis Extends to Oregon and Washington
The affordability crisis isn’t limited to California alone. Ten counties in Oregon and Washington are also grappling with the same issue. In Clackamas County, located just outside of Portland, home prices have surged by 33% in just two years, according to MoneyGeek’s analysis.
Rising Mortgage Rates Add to the Challenges
Although mortgage rates have mostly declined since October 2023, the average rate on a 30-year home loan remains significantly higher than it was two years ago when it stood at 3.22%. This substantial difference in rates has discouraged homeowners with low-interest mortgages from selling their properties, thereby limiting the number of available homes on the market.
“While lower mortgage rates are good news, potential homebuyers are still grappling with the dual challenges of limited inventory and soaring home prices,” said Sam Khater, Chief Economist at Freddie Mac.
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Conclusion
The dream of homeownership is slipping further out of reach for many Americans as home prices continue to rise while wages remain stagnant. This affordability crisis is not confined to wealthy enclaves but has spread to various counties across the United States. California, in particular, is facing significant challenges, with several counties now experiencing unaffordable housing prices. The West Coast’s affordability crisis extends beyond California, affecting areas in Oregon and Washington as well. The rising mortgage rates further exacerbate the challenges faced by potential homebuyers. With limited inventory and skyrocketing prices, the path to homeownership seems increasingly daunting for many families.
