Housing unaffordability set to persist, even as prices fall – theMReport.com

At the height of the coronavirus pandemic, home values ​​and incomes rose – however, they did not do so at the same rate. To find out how much home values ​​have increased relative to income, LendingTree analyzed data from the US Census Bureau’s American Community Survey, comparing the two variables from 2019 to 2021.

While many states saw significant growth in median household income, home values ​​rose more than 10 percentage points, on average, relative to incomes in the nation’s 50 states.

Main conclusions:

  • Home value growth has outpaced income growth in all 50 states across the country. On average, the median home value increased by 17.36% from 2019 to 2021, while the median household income increased by an average of 6.00%. That’s a difference of 11.36 percentage points.
  • Idaho, Utah and Arizona are the states where home values ​​have risen the most relative to income. While incomes rose more than the national average in Idaho and Arizona, home values ​​rose 35.73 and 20.14 percentage points more in each state. In Utah, where income growth was less robust than the national average, home values ​​rose 22.83 percentage points faster than the state’s median household income.
  • Home prices rose the least relative to incomes in Vermont, Iowa and Connecticut. In Iowa and Connecticut, median household incomes increased by 6.34% and 6.26% from 2019 to 2021, while home values ​​increased by 9.75% and 10.97%, or differences of 3.42 and 4.71 percentage points. In Vermont, where income and median home value increased by double digits (14.97% and 16.42%, respectively), median home value increased 1.46 percentage points more than income household median.

States where home values ​​have risen the most relative to income

No. 1: Idaho

  • Percentage growth in median household income from 2019 to 2021: 8.98%
  • Percentage growth in median home value from 2019 to 2021: 44.71%
  • Percentage point difference between home value and income growth: 35.73

No. 2: Utah

  • Percentage growth in median household income from 2019 to 2021: 4.84%
  • Percentage growth in median home value from 2019 to 2021: 27.67%
  • Percentage point difference between home value and income growth: 22.83

#3: Arizona

  • Percentage growth in median household income from 2019 to 2021: 11.28%
  • Percentage growth in median home value from 2019 to 2021: 31.42%
  • Percentage point difference between home value and income growth: 20.14

States where home values ​​have risen the least relative to income

#1: Vermont

  • Percentage growth in median household income from 2019 to 2021: 14.97%
  • Percentage growth in median home value from 2019 to 2021: 16.42%
  • Percentage point difference between home value and income growth: 1.46

No. 2: Iowa

  • Percentage growth in median household income from 2019 to 2021: 6.34%
  • Percentage growth in median home value from 2019 to 2021: 9.75%
  • Percentage point difference between home value and income growth: 3.42

#3: Connecticut

  • Percentage growth in median household income from 2019 to 2021: 6.26%
  • Percentage growth in median home value from 2019 to 2021: 10.97%
  • Percentage point difference between home value and income growth: 4.71

Home affordability will likely persist, even if prices fall

Although home prices are starting to drop in many parts of the country, that doesn’t mean housing will become more affordable for the majority of buyers who use a mortgage to purchase a home.

This is because mortgage rates have risen significantly since the start of 2022. As a result, homes purchased at current rates may have higher monthly payments than homes purchased earlier in the year, even if borrowers take out smaller loans. on these newly purchased homes. .

To read the full report, including more charts, data and methodology, click here.

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