According to some experts, we are once again reaching a point with housing affordability where the check engine light is coming on signaling some routine maintenance may need to take place or something major could happen.
According to CNBC, in May, the median price of an existing home was $239,700, a new record. Part of the record high is that more homes are being sold at the higher end of the market than before, and prices are still about 10 percent below the peak of 2006. But the same cannot be said for all local markets, such as San Francisco, where home prices have been out of control for a while now.
In most markets where affordability has drastically declined, low inventory is to blame. A lack of affordability, due in large part to not enough homes for sale, is the single largest factor holding back a more robust housing recovery. And it isn’t just homeowners who are feeling the strain, the number of cost-burdened renters has grown and is at a historic high, as well. From 2008 to 2014 the number of cost-burdened renters rose from 3.6 million to 21.3 million.
What has some experts especially worried is that housing affordability is already a major issue even with low mortgage rates, so what will happen to affordability when these rates rise?