If you’ve been looking to purchase a Boston condo for sale, this new study may not surprise you, real estate prices are rising faster than incomes.
During the Covid pandemic, home prices have shot up nearly nationwide while household income fell.
However, affordability was a growing problem well before 2020 and the start of the pandemic.
In the last decade, the median home price rose roughly 30% and incomes crept up just 11% over the same time period, according to a Bankrate analysis of data from the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
Over 50 years, the difference is even more striking. After accounting for inflation, home prices have jumped 118% since 1965, while income has only increased by 15%, according to a separate report by online brokerage Clever Real Estate, based on Census data.
In effect, the pandemic-induced run on housing only worsened the affordability crisis for many potential home buyers, even with record-low interest rates on mortgages.
To afford a home in 2021, Americans need an average income of $144,192 — far more than the median household income of $69,178,
Some experts — and lenders — say a home’s sale price should not exceed 2.5 times your annual salary.
However, with home prices rising exponentially faster than income, it is increasingly difficult to do this, noted Francesca Ortegren, Clever Real Estate’s data scientist.
Of America’s 50 most populated cities, only six had a “healthy” price-to-income ratio at or below 2.6, Clever found: Pittsburgh, Cleveland, Oklahoma City, St. Louis, Cincinnati and Birmingham, Alabama.
On the other end of the spectrum, the least affordable cities were, unsurprisingly, San Jose, San Francisco, San Diego, New York and Los Angeles — where the price-to-income ratio is as high as 9.8