Almost Half of Americans Can’t Afford a Home

July 18, 2019
counting money
Photo: Unsplash/Sharon McCutcheon

John Burns Real Estate Consulting found that only 54% of Americans can afford an entry-level home in their area.

In the 130 metro areas we analyzed, only 54% of Americans can afford a home priced 20% below the median home price in their area—a reasonable proxy for an entry-level home1. The recent plunge in mortgage rates to 3.7% from 4.9% in November added just 3% to that affordability figure. In California, only 34% can afford a home, with San Francisco and San Jose least affordable, at only 11% and 18%, respectively. The most affordable market is Allentown, PA-NJ, where 77.4% of residents are able to purchase a home using our criteria.

Because of this affordability gap for would-be homeowners, many smart investors continue to invest in rental homes. Individual investors can also now capitalize on this trend and buy homes, or even partial interests in homes, online through companies like Roofstock. This strategy of investing in rental homes is responsible for the hottest new home development craze: newly built rental home neighborhoods, an opportunity we first identified in 2015. Helping fuel the rental demand is the recent Tax Cut and Jobs Act that effectively eliminated the tax benefits of homeownership.

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