In Pursuit of the Dream
It is the expectation of life journey in America as is envisioned. Children will enter school, carve a field of interest to use as a tool to acquire the prizes of life. A home, a family a good car, career advancement, retirement savings, and then retirement. This is often referred to as the American Dream. It’s one of the things that attracts so many to this country.
Over the last decade the dream has become a nightmare. The path along the way has rerouted to detour to a dead end. Something happened along the cycle of American life. Something that appears to be very grave, disheartening and depressing.
Housing prices are growing more unaffordable even with the astronomical rise in mortgage rates, putting ownership out of reach for millions of Americans.
That’s according to a new report published by real estate data provider ATTOM, which examined 572 U.S. counties and determined that median home prices in 99% of those areas are out of reach for the average income earner, who makes about $71,214 annually.
“The latest trend continues a two-year pattern of homeownership getting more and more difficult for average U.S. wage earners,” the report said.
Affordability is worsening across the country, thanks to a third-quarter spike in both home prices and mortgage rates. Combined, the two have helped to push the typical portion of average wages nationwide required for major homeownership expenses up to 35%.
The housing shortage has only served to boost consumer demand, which is keeping prices uncomfortably high. The National Association of Realtors reported that the national median existing-home price was $407,100 at the end of August — up 3.9% from the same time one year ago.
“The dynamics influencing the U.S. housing market appear to continuously work against everyday Americans, potentially to the point where they could start to have a significant impact on home prices,” said ATTOM CEO Rob Barber. “We will see how this shakes out as the peak 2023 buying season winds down.”
The average rate for a 30-year fixed loan jumped to 7.31% last week, Freddie Mac reported, well above both the 5.89% rate recorded one year ago and the pandemic-era lows of 3%.
Even though mortgage rates are nearly double what they were three years ago, home prices have hardly budged. That is largely due to a lack of available homes for sale. Sellers who locked in a low mortgage rate before the pandemic began have been reluctant to sell, leaving few options for eager would-be buyers.
With that said the real “devil in the details” in the number of homes being bought by people like Warren Buffet and B.W. Hughes. who buy up a very large percentage of homes on the market, and some that aren’t. Couple that with Corporate ownership and it’s a direct impact on available homes for sale. The competition between corporation buyers against American Citizenry has driven prices continually upwards.
The most difficult part to watch is the death kneel of optimism in the dream with the influx of low wage workers though mass immigration. This has driven the average wages far below what is required for home ownership today.
Annual wages of more than $75,000 needed to afford typical home in more than half of counties analyzed
Annual wages of more than $75,000 are needed to pay for major costs on the median-priced home purchased during the third quarter of 2023 in 330, or 57 percent, of the 578 markets in the report.
All but one of the top 25 highest annual wages required to afford typical homes are on the east or west coasts, led by New York County (Manhattan), NY ($407,125); Santa Clara County (San Jose), CA ($357,889); San Mateo County (outside San Francisco), CA ($356,519); Marin County (outside San Francisco), CA ($325,323) and San Francisco County, CA ($319,673).
The American Job Market is operating at very low percentages of unemployment but the wages don’t equate to large scale buying power when you factor in things like the costs related to upkeep and maintenance.
There doesn’t seem to be a solution insight as to how to put wages and home pricing in the same stratosphere.
To solve this problem there needs to be income that can both sustain the day to day existence while allowing for savings for the dream of home ownership. While the American Dream may not be dead it is certainly absent in today’s economy and has been since the COVID Pandemic. The question is will we recover or is this the death kneel. Will America become a land of renters and squatters whose purpose is to enrich the wealthy? We can and should keep the dream alive.
The answer may lie in policy and economic stimulus. This needs to addressed sooner rather than later. Home ownership is the number 1 measurement of weath in the US.
