US Housing: 99% Of Americans Cannot Afford To Buy a House in 2023 (2024)

FAQs

What percent of Americans can't afford a house? ›

The nationwide median price of a new single-family home is $495,750, meaning half of all new homes sold in the U.S. cost more than this figure and half cost less. A total of 134.9 million households — roughly 77% of all U.S. households — cannot afford this median-priced new home based on a mortgage rate of 6.5%.

This is because housing supply persistently falls short. According to the U.S. Census Bureau, roughly 1.45 million homes were completed in 2023. The increase over 2022 is a sign of progress, but much more needs to be done. Reforming zoning rules to allow for more density is key for more homes to be built.

Housing costs rising faster than pay

"Housing costs have been outpacing incomes since the 1960s," Chris Herbert, the managing editor for Harvard University's Joint Center for Housing Studies told CBS News. "Why is that? Partly because of the fact that land, on which all homes sit, has been growing faster than incomes."

First, median wages haven't kept pace with the cost of housing. In fact, the median house price today is more than six times that of the median income. The housing affordability crisis is also an issue of supply and demand, specifically on the supply side.

That makes sense, of course, as older Americans have had a longer time to make payments. But with nearly two-thirds of retirement-age Americans having paid off their mortgages, it means that the average age they have gotten rid of that debt is likely in their early 60s.

High borrowing costs and high home prices have contributed to a jump in rent prices. Those twin forces have made it unaffordable for a lot of Americans to afford to buy a home, forcing people to pivot to renting, which has created competition for properties, pushing up prices.

The current one is a result of: too few homes being built over decades; high mortgage rates making moving home unaffordable for homeowners; COVID-19 disruptions; and Wall Street investors buying up too many owner-occupied homes for rental. Will the housing shortage in the US improve?

In order of severity, here are the top 10 states with the most severe housing underproduction, according to the Up for Growth study: California, with a shortage of over 881,000 homes.

In 2021, nearly 22 million American households were burdened by the cost of housing, a figure that has increased since 2019. A 2022 survey found that more than a third of those renting did not own a home because they could not afford one.

Four of the world's 11 "impossibly unaffordable" housing markets are in California, a study found. There are seven of these pricey markets across the US and Canada, per the Demographia report. The study blamed land use policies for constraining housing supply and driving up prices.

Which country has the most unaffordable housing? ›

Hong Kong was crowned the most unaffordable market in the world, followed by Sydney, Australia then Vancouver. A total of 11 markets, including Vancouver, were deemed “impossibly unaffordable,” meaning median house prices are more than nine times the median household income.

A pair of recent studies predicts that you'd need to earn more than $100,000 per year to comfortably afford a typical home in much of the U.S. right now. That's a major jump from just four years ago, and it comes at a time when fewer homes are on the market and mortgage rates and housing prices have been high.

Renting relieves you of paying for the maintenance, insurance, property taxes, and other costs of owning a home. If you're a high-net-worth individual who splits their time across different properties, you probably don't want to spend time dealing with the headaches that come with ownership.

Affordability is a challenge for Gen Z homebuyers, but it's also a challenge for millennials and buyers of other generations. The Gen Zers now in early adulthood have had less time to accumulate savings than previous generations, which could make it more difficult to become a homeowner in the short term.

Boomers typically have low housing costs, and most of them "are only in their 60s, still young enough that they can take care of themselves and their home without help," Bokhari said in the report.

Share of mortgage-free homes in the U.S.

Line chart showing how the share of mortgage-free homes increased from 34.3% in 2012 to 39.3% in 2022, an increase of five percentage points. There's a larger share of homes in America without mortgages now compared to any time since 2005, according to the latest census data.

Homeownership has long been the quintessential American dream. It symbolizes stability, success and a sense of belonging. However, recent data from the U.S. Census Bureau's Housing Vacancies and Homeownership survey reveals that almost half of Americans, around 45%, currently don't own a property.

Earlier this year, 24 percent of renters said they couldn't afford their rent, in a report by Intuit Credit Karma, a free credit and financial management platform. The rental dilemma was especially pronounced for Gen Z (12-27 years old).

About half of homeowners and renters said they have periodically struggled this year to afford their mortgage payment or rent, according to a recent survey from online real estate broker Redfin.