Report: Middle-class home buyers priced out of housing market

Daily Mail​

20-05-2025

The classic American Dream of owning a home is now officially out of reach for much of the middle class. A shortage of affordable properties is making homeownership nearly impossible, especially for workers in honorable fields like teaching and nursing, a new report has revealed. In March, only one in five homes listed across the US was considered affordable for households earning $75,000 a year.
Before the pandemic, nearly half of all listings were considered within reach for the same income bracket, according to the National Association of Realtors (NAR). The report found the US would need to add more than 400,000 new homes priced at $255,000 or less to return to pre-Covid levels of affordability. A single family home in the US now sells for nearly $420,000, according to the Federal Reserve . Stubborn mortgage rates are also causing would-be buyers to stay away.
'It's discouraging,' said Nadia Evangelou, senior economist for the NAR, told CBS News . 'We hear from people who are earning a good income — nurses, teachers, plumbers — and still feel like homeownership is out of reach.' But that could soon change, as experts predict various markets across the US could be heading for a crash , sending home prices plummeting.
Middle-income earners were once the backbone of America's housing market, when working hard at an everyday job would allow for home ownership. But now 26 major metros are seeing worsening affordability gaps. Los Angeles, San Diego, Miami, and New York City are among the least affordable cities to buy.
In Los Angeles, the number of homes affordable to middle-income families has dropped by over 12,000 listings in the last year. Meanwhile in Miami, the number of homes affordable to middle-income families has dropped by over 21,000. Formerly modestly-priced areas like Scranton and Harrisburg, Pennsylvania, are also now out of reach due to restrictive zoning laws and lack of new construction, the NAR said.
The state ranked 44th in new housing development between 2017 and 2023. The lack of building has sent existing home prices soaring. 'Although the total number of homes for sale has improved since the low point in 2021, many new listings are simply out of reach for a large share of American households,' the report reads. 'That's why home sales in the lower and middle price tiers remain sluggish and more volatile than the high-end market — high prices, elevated mortgage rates, and a lack of affordable options still squeeze buyers at these levels,' the report continued.
Overall, as of March, a household earning $50,000 can only afford 8.7 percent of listings today, down from 9.4 percent a year ago. Households earning $75,000 a year — often made up of teachers, nurses, and skilled trades workers — can afford 21.2 percent of listings. Households earning $100,000 annually can afford 37.1 percent of listings. Higher-income households have near-total access to the market. Buyers earning $200,000 or more can afford 80 percent to 100 percent of the listings.
But some places across the US are seeing a rise in affordable listings, though. In Columbia, South Carolina, and Raleigh, North Carolina, affordable listings have risen by as much as 5 percent, mostly due to new construction. Areas in Texas, Florida, and Tennessee have seen inventory not only recover, but grow higher than it was before the pandemic. According to the report, there is a solution, but it will take time and effort. 'Solving the persistent housing shortage across our country requires a multifaceted approach that involves governments, developers, and communities,' it reads.
'The goal is to create a balanced and sustainable housing market that meets the demand needs of people at any income level, particularly those most in need of affordable options.' Suggestions include easing local land-use and zoning regulations to foster more development, expanding vocational training programs to ensure an adequate labor supply, and actively promoting these initiatives. Housing options like micro-apartments, where residents share kitchens and bathrooms dorm-style, are also gaining attention as low-cost alternatives.
Meanwhile, it may not all end terribly for potential buyers. The closer the US gets to a housing market crash, the better position people could be in to be able to afford a home. Nearly half of all sellers are having to give concessions to buyers as as the housing market slows to levels not seen since the Great Recession. From January through March, 44.4 percent of home sales included incentives like closing costs being covered, repair credits, or mortgage-rate buydowns. One agent said a seller offered to cover HOA fees. These extras come on top of any price negotiations and highlight just how tough the market has become for sellers.
Chaley McVay, a Redfin Premier agent in Portland, OR, says she's seeing deal sweeteners in most offers, particularly for first-time buyers. 'Buyers used to ask for help with small repairs. Now they need help just to afford the purchase,' McVay explained. Stephanie Kastner, a Redfin agent in Seattle, said that sellers of condos and new townhomes are especially likely to offer major perks like closing cost coverage or, in one instance she saw, fancy appliances. 'Builders want to keep listing prices high, so they're more willing to offer extras instead of cutting the price,' Kastner said.
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