28 August 2023
The housing market is currently the least affordable since 1984 due to the Fed’s monetary stimulus during Covid, causing a surge in home prices while real median weekly earnings dropped. A recent increase in home prices and a 22-year high in 30-year fixed mortgage rates have worsened the situation. Now, 38.6% of median household income is needed for average home payments, a 92% increase from two years ago, straining budgets already hit by inflation. To restore home affordability to its 25-year average, a significant decline in home prices, reduction in mortgage rates, or growth in median household incomes is necessary, according to Black Knight.