Economic Challenges Remain For U.S. Homebuyers

Soaring housing costs on top of the surge on prices for gas, food, and other necessities will cause continued pressure for first time house buyers and low-income households in the U.S., says the ‘State of the Nation’s Housing 2022’ report from Harvard Joint Centre for Housing Studies. Home appreciation hit 20.6 per cent in March and, on top of that, rents were up 12 per cent for the first quarter of 2022 from the previous year. Rising interest rates, home prices, and rising qualifications for home loans have made it more difficult for first time buyers to afford a home. In addition, the massive windfall from rapid home price appreciation has widened the wealth gap between homeowners and renters. For those that could afford a home, job and income losses early in the pandemic increased the affordability challenges for millions of households who were already struggling. In 2020, the nationwide share of households paying over a third of their income for housing climbed 1.5 percentage points to 30 per cent. Meanwhile, residential construction has picked up after trailing the pace of household growth for almost a decade. Despite all these challenges, the report says the near-term outlook for housing demand is still largely positive.