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The Hill
3 days ago
- Business
- The Hill
Here's where normal people can still buy homes, according to real estate data
(NEXSTAR) – If you've given up on home ownership, you're not alone. The dream has grown unaffordable and unrealistic for Americans in many major cities. 'The rapid rise in home values coupled with the doubling of mortgage rates caused the cost of owning a home to soar. Unfortunately, incomes just haven't kept up. That lowered affordability everywhere,' said Zillow senior economist Orphe Divounguy. But if you look closely, some pockets of America are still considered 'affordable' to the average family. In a data analysis shared with Nexstar, Zillow identified which cities are affordable by determining where the median-income family is able to spend less than one-third of their income on housing costs. If you're able to scrape together a 20% down payment, several dozen metro areas remain affordable for a median family looking to buy. However, most people don't have that much cash sitting around in the bank. When you set the target to a more reasonable 10% down payment, only 11 metro areas are still considered 'affordable': Most places that still rank as affordable are found in the Midwest and the South, where zoning codes tend to be more lenient and builders have been able to respond to rising demand more quickly. 'At the start of the pandemic, when residential mobility increased, home values in the Midwest, Great Lakes region and more inland South shot up just as fast as the rest of the country, and even faster in some metros. But home values in these regions — for the most part — were relatively less expensive to begin with,' Divounguy said. 'So even with all that growth, many of them are still relatively more affordable, especially if you have access to a large down payment.' If you're looking for the lowest prices overall, Redfin recently released a list of 10 major metro areas where homes are still under $300,000. Those willing to relocate to Detroit will find some of the best deals. The median sale price there is $180,000. As mentioned before, if prospective homebuyers are able to put a larger payment down up-front, their real estate prospects expand. Cincinnati, Indianapolis and Oklahoma City all become affordable to a median-income family with a 20% down payment. (See the full list at the bottom of this story.) For now, a few Upstate New York cities remain on the list, but that could soon change, according to Divounguy. Buffalo has been one of the hottest housing markets in the country the past couple years and supply isn't keeping up with demand. 'Strong job growth in the area has far outstripped new permits, and inventory of homes is nearly half what it was before the pandemic. Buffalo was previously one of the most accessible large cities in the nation. Now a mortgage for a typical home there is unaffordable for a family making the median household income, even with a 20% down payment.'
Yahoo
23-05-2025
- Business
- Yahoo
More economists think home prices will fall this year
More than a decade of near-continuous home price appreciation may end this year. Amid growing signs of a weak spring for home sales — sellers are listing but buyers aren't buying — more housing economists are expecting a slight dip in average home prices this year. Redfin now expects median home prices to finish 2025 about 1% lower than 2024, while Zillow is calling for a 1.4% decline. If those predictions hold true, 2025 would be the first year home prices have fallen since 2023, when a sharp spike in mortgage rates drastically reduced affordability and priced many would-be buyers out of the market. 2023 was also something of a blip. Buyers returned when mortgage rates dropped from highs near 8%, and they quickly bid up prices again when faced with little supply. Median home prices continued to set new records last year and into 2025. Now there are signs the market is shifting. The combination of sky-high prices and mortgage rates near 6.8% has kept many buyers sidelined even as inventory rises to levels not seen since mid-2020. 'The total number of homes for sale is up 20% from a year ago,' said Orphe Divounguy, a senior economist at Zillow. 'It's the best thing that could happen for buyers. It means buyers have more bargaining power, and they have more options to choose from.' Regional differences Even as the nationwide median home price looks poised to drop, the trend doesn't hold in all markets. In the four weeks through May 18, median sales prices declined in 10 of the top 50 largest metropolitan areas in the country, according to Redfin data. And Fannie Mae's Home Price Appreciation Index, which tracks single-family homes, calls for a 4.1% jump in prices this year, firmly positive but below last year's 5.8% increase. Cities where homebuilding has been robust in recent years, like Dallas, Houston, Austin, Tex., and Tampa, Fla., saw some of the largest price declines this May compared to a year earlier. Meanwhile, prices are still rising in parts of the Northeast and the Midwest. Median sales prices were up 13.8% in the Philadelphia area through May 18, compared to a year earlier. Miami prices gained more than 10%, while the Detroit metro area saw a 9.5% jump. Buyers are being picky for now. Existing home sales in April were the most sluggish for that month since 2009, during the depths of the financial crisis. Sales were down from a year earlier in all regions of the country except the Northeast, where they held flat. Home sales that were completed in April usually went under contract in February or March, slightly before the traditional peak homebuying season got underway. Divounguy, though, is optimistic that sales will pick up into the summer as some of the recent economic uncertainty fades and prospective buyers who put their plans on hold get comfortable enough to return to the market. He expects home sales to rise 1.4% compared to last year as affordability improves slightly. Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages, and home insurance.
Yahoo
17-04-2025
- Business
- Yahoo
America's housing shortage by the numbers
This story is the fourth in a four-part series. Read Part 1 here, Part 2 here and Part 3 here. The U.S. has been short of the homes it needs to meet its growing population for more than a decade, driving up prices and shooting down the dreams of millions of would-be buyers. While buying a starter home was once a safe and attainable way to build wealth, rising home prices, falling construction rates and economic volatility have left the U.S. without nearly enough affordable housing. Daryl Fairweather, chief economist at Redfin, said there are two basic ways of looking at the depth of the affordable housing shortage: how much of a household's income it costs to buy a home of average price, and the share of homes for sale in a region that are affordable for someone making the local median income. For prospective homebuyers, Fairweather said, one way focuses on 'how much are they going to have to spend out of their earnings to afford a home,' while the other focuses on 'what share of homes in the market are actually priced that way.' The U.S. has been able to make a small dent in the housing shortage, as a construction boom set off amid the COVID-19 pandemic is gradually adding more houses to the market. But housing prices have risen far faster than supply as a combination of low pandemic interest rates and societal changes fueled a historic increase in housing costs. 'We see an improvement that's encouraging and very promising, and we want to see even more inventory out there,' said Nadia Evangelou, senior economist and director of real estate research for the National Association of Realtors (NAR). 'However, we are far away from a balanced market.' After skyrocketing during the COVID-19 pandemic and economic recovery, housing prices have drifted back down slowly amid higher interest rates and slightly more supply. The median home price is a benchmark for how much a U.S. home costs, which is largely driven by the gap between housing supply and homebuyer demand. The median home price in February was $414,500, according to the Census Bureau, down from $427,400 in January and $420,900 a year ago. The average home price, which reflects a wider range of factors, was $487,100 in February, down from $507,900 in January and $509,000 a year ago. 'When new households are formed faster than the increase in the housing stock, the share of vacant homes falls, putting upward pressure on prices and rents,' wrote Orphe Divounguy, senior economist at Zillow, in a 2024 research report. Divounguy estimated that in 2022, there were 4.5 million individuals or families who were not living in their own houses or rental units, despite preferring to do so. 'Building more homes is of course an obvious step toward chipping away at this persistent shortage,' Divounguy wrote. Housing construction rates have improved in the wake of the pandemic — particularly in the South and West, where a housing boom and the rise of remote work fueled a major demographic shift toward the Sun Belt. Housing starts — the beginning of new housing construction projects — rose 11.2 percent in February, according to the Census Bureau, a rate that would yield 1.5 million new homes built per year. Single-family housing starts rose 11.4 percent in February, the highest rate in a year, but are primarily happening in just one part of the country. While housing starts were up 20.2 percent over the past year in the West, they were down 4.7 percent in the Northeast, 21.5 in the Midwest and 8.3 percent in the South. The number of homes under construction was also down in February from a year ago, falling 6.7 percent to 640,000 homes. Despite the modest improvement in some places, homebuilders are bracing for those numbers to slip even further. 'While solid demand and a lack of existing inventory provided a boost to single-family production in February, our latest builder survey shows that builders remain concerned about challenging housing affordability conditions, most notably elevated financing and construction costs as well as tariffs on key building materials,' said Buddy Hughes, chair of the National Association of Home Builders (NAHB), in a statement. Jing Fu, NAHB senior director of analysis and forecasting, said the group expects single-family housing starts to remain flat this year amid concerns about tariffs and a slowing economy. The increase in housing inventory has also not been spread equally among income levels, Evangelou said. 'Inventory is improving, so that's very good news. What we want to see of course is inventory to increase in all price levels,' she said. Evangelou said that according to NAR research, a person or family with an income of $75,000 can afford a home worth up to $255,000, which covers 21 percent of current listings. Before the COVID-19 pandemic, roughly 49 percent of homes would be affordable at that income level. 'That [inventory] increase is mostly happening in the mid- and upper-price tiers. For buyers earning less than $50,000 a year, who are looking for homes for less than $170,000, conditions have actually worsened compared to a year ago, so there are fewer affordable listings for them today compared to a year ago.' The gap between how much Americans must earn to buy a home and how much they need to rent an apartment is also widening. Redfin calculated that the average American needs to make $116,633 each year to afford a median-priced home, 81.8 percent more than the $64,160 needed to afford a typical apartment. 'Demand isn't really going anywhere, and maybe demand will be weaker if we're entering into a recession, but the number of people that need homes is fundamentally not going to go down,' Fairweather said. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
17-04-2025
- Business
- The Hill
America's housing shortage by the numbers
This story is the fourth in a four-part series. Read Part 1 here, Part 2 here and Part 3 here. The U.S. has been short of the homes it needs to meet its growing population for more than a decade, driving up prices and shooting down the dreams of millions of would-be buyers. While buying a starter home was once a safe and attainable way to build wealth, rising home prices, falling construction rates and economic volatility have left the U.S. without nearly enough affordable housing. Daryl Fairweather, chief economist at Redfin, said there are two basic ways of looking at the depth of the affordable housing shortage: how much of a household's income it costs to buy a home of average price, and the share of homes for sale in a region that are affordable for someone making the local median income. For prospective homebuyers, Fairweather said, one way focuses on 'how much are they going to have to spend out of their earnings to afford a home,' while the other focuses on 'what share of homes in the market are actually priced that way.' The U.S. has been able to make a small dent in the housing shortage, as a construction boom set off amid the COVID-19 pandemic is gradually adding more houses to the market. But housing prices have risen far faster than supply as a combination of low pandemic interest rates and societal changes fueled a historic increase in housing costs. 'We see an improvement that's encouraging and very promising, and we want to see even more inventory out there,' said Nadia Evangelou, senior economist and director of real estate research for the National Association of Realtors (NAR). 'However, we are far away from a balanced market.' Median home sales price After skyrocketing during the COVID-19 pandemic and economic recovery, housing prices have drifted back down slowly amid higher interest rates and slightly more supply. The median home price is a benchmark for how much a U.S. home costs, which is largely driven by the gap between housing supply and homebuyer demand. The median home price in February was $414,500, according to the Census Bureau, down from $427,400 in January and $420,900 a year ago. The average home price, which reflects a wider range of factors, was $487,100 in February, down from $507,900 in January and $509,000 a year ago. 'When new households are formed faster than the increase in the housing stock, the share of vacant homes falls, putting upward pressure on prices and rents,' wrote Orphe Divounguy, senior economist at Zillow, in a 2024 research report. Divounguy estimated that in 2022, there were 4.5 million individuals or families who were not living in their own houses or rental units, despite preferring to do so. 'Building more homes is of course an obvious step toward chipping away at this persistent shortage,' Divounguy wrote. Housing construction starts Housing construction rates have improved in the wake of the pandemic — particularly in the South and West, where a housing boom and the rise of remote work fueled a major demographic shift toward the Sun Belt. Housing starts — the beginning of new housing construction projects — rose 11.2 percent in February, according to the Census Bureau, a rate that would yield 1.5 million new homes built per year. Single-family housing starts rose 11.4 percent in February, the highest rate in a year, but are primarily happening in just one part of the country. While housing starts were up 20.2 percent over the past year in the West, they were down 4.7 percent in the Northeast, 21.5 in the Midwest and 8.3 percent in the South. The number of homes under construction was also down in February from a year ago, falling 6.7 percent to 640,000 homes. Despite the modest improvement in some places, homebuilders are bracing for those numbers to slip even further. 'While solid demand and a lack of existing inventory provided a boost to single-family production in February, our latest builder survey shows that builders remain concerned about challenging housing affordability conditions, most notably elevated financing and construction costs as well as tariffs on key building materials,' said Buddy Hughes, chair of the National Association of Home Builders (NAHB), in a statement. Jing Fu, NAHB senior director of analysis and forecasting, said the group expects single-family housing starts to remain flat this year amid concerns about tariffs and a slowing economy. Affordability ratios The increase in housing inventory has also not been spread equally among income levels, Evangelou said. 'Inventory is improving, so that's very good news. What we want to see of course is inventory to increase in all price levels,' she said. Evangelou said that according to NAR research, a person or family with an income of $75,000 can afford a home worth up to $255,000, which covers 21 percent of current listings. Before the COVID-19 pandemic, roughly 49 percent of homes would be affordable at that income level. 'That [inventory] increase is mostly happening in the mid- and upper-price tiers. For buyers earning less than $50,000 a year, who are looking for homes for less than $170,000, conditions have actually worsened compared to a year ago, so there are fewer affordable listings for them today compared to a year ago.' The gap between how much Americans must earn to buy a home and how much they need to rent an apartment is also widening. Redfin calculated that the average American needs to make $116,633 each year to afford a median-priced home, 81.8 percent more than the $64,160 needed to afford a typical apartment. 'Demand isn't really going anywhere, and maybe demand will be weaker if we're entering into a recession, but the number of people that need homes is fundamentally not going to go down,' Fairweather said.
Yahoo
11-02-2025
- Business
- Yahoo
Are Millennials the reason single-family home rents are off the charts? A new Zillow report looks at the numbers
It's well past time to stop blaming Millennials for avocado toast, but a new report finds they might be driving the cost of rents for single-family homes off the charts. Millennials have become the dominant force in U.S. real estate, but the hurdles of the housing market—in terms of both supply and affordability—means more and more families are opting to rent single-family homes rather than buy them. A recent Zillow report shows that rents for single-family homes have skyrocketed approximately 41% above pre-pandemic levels, while multifamily rents units have gained 26% in the same time period. The typical asking rent was $2,174 for single-family homes as of December 2024, while the typical asking rent was $1,812 for multifamily units, according to the report. 'Rent growth has eased, but rents are still too high,' says Orphe Divounguy, a senior economist at Zillow. He adds that while wage growth has outpaced the gains in rent costs for multifamily units, it's still below the rent growth rate for single-family homes. Meanwhile, the prospect of buying a single family home is receding for many due factors including paltry inventory in many markets, surging home home values, and the challenges of saving up a competitive down payment. Just how prohibitive are home down payments these days? It's enough of an issue that one of Zillow's dashboards, focused on home affordability, includes a tool where you can look at the estimated time required to save up a down payment on a typical home during different time periods. The tool works by estimating that you're independently saving up a 10% down payment on a typical home by socking away 5% of the median household income each month. As of November 2024—the most recent data available in the dashboard—it would take an estimated nine years to save up a down payment under these parameters. Compare that to the end of 2019, shortly before the Covid-19 pandemic, when the estimate was seven years. We can't talk about home affordability without mentioning mortgage rates. After the Federal Reserve slashed rates to effectively zero to support the economy during the pandemic, mortgage rates hit an all-time average low of 2.65% in January 2021. Then rates surged as the Fed tightened policy coming out of the pandemic, peaking at 7.63% in October 2023. Now, despite the Fed's three rate cuts in late 2024, the average interest rate on a fixed-rate, 30-year home loan has remained near 7% for months. Zillow's Divounguy as we've seen American consumers struggling more and more with housing affordability, the age of the median renter has gone up. 'The age of a typical renter had been steadily but slowly increasing over time,' he says. 'Then it jumped substantially between 2023 and 2024.' The median age of a renter in the United States was 42 years old as of 2024, up from 33 years old just three years prior. Rents for single-family homes rose from year-ago levels in all 50 major metro areas that the report examined, while rents for multifamily units rose in 42 of those 50 metros. 'Right now, more multifamily units are hitting the market than at any time in the past 50 years, but detached homes aren't seeing the same surge in construction,' Skylar Olsen, chief economist at Zillow, wrote when the report was released. 'We've also got the large millennial generation wanting to move into a larger space. High and unpredictable mortgage rates and hefty down payments are pushing some to rent that lifestyle instead of buying it.' The metros with the highest increases in single-family rental cost were Hartford (7.7%), St. Louis (7.6%), Cleveland (7.4%), Chicago (6.8%), and Indianapolis (6.6%). Meanwhile, the metros with the highest increases in multifamily rental cost were Hartford (8.3%), Cleveland (6.3%), Providence (6.3%), Richmond (5.8%), and Chicago (5.4%). As rents remain comparatively elevated, landlords are turning to concessions to draw in new tenants. These may include such promotions as months of free rent or free parking—and, with about 41% of rental listings on Zillow offering concessions, the report notes this is a record high. Concessions are up compared to year-ago levels in 48 out of 50 major metros areas. The areas with the biggest increases in such listings are Denver, Louisville, Raleigh, Indianapolis, and Nashville, per the Zillow report. With demand from prospective homebuyers remaining strong, even as pandemic supply chain snarls made construction more expensive and existing homeowners locked in with sub-5% mortgage rates now often termed the 'golden handcuffs,' builders adapted, says Divounguy. 'They could have pulled back when mortgage rates more than doubled,' he says. 'You could have seen builders pulling back for good because of concerns that they'd potentially see some sort of housing market crash. But they persevered, they changed the way they build.' By that, Divounguy means we've seen smaller builds and taller builds hitting the market—for example, more condominiums and townhomes—in recent years. Builders have leaned into density as a way to reconcile strong demand and the reality of limited usable land. 'They did a good job of adapting to changing market conditions wherever they could,' he adds. A necessary part of the solution will have to be local governments looking at how they can ease the way for more construction, says Divounguy, such as doing away with minimum parking requirements and minimum lot sizes. Census Bureau data shows that at the moment, single-family homes only make up about 31% of the rental market. Increased demand for and upward price pressure on single-family rentals highlights the problems of the struggling U.S. housing market. Here's the good news: Builders keep increasing inventory, which is helping with affordability. Divounguy is also encouraged by how often the topic of affordability appears in the media and in conversations among government officials. 'You hear more about it in headlines, you see the federal government but also state and local governments talking about it and wanting to do something about it,' he says. 'I think it's the most we've heard about housing affordability in a long time.' Buffalo and Indianapolis will be the hottest housing markets of 2025, according to Zillow's latest forecast How the Federal Reserve impacts mortgage rates Renters need to watch out for hidden junk fees This story was originally featured on
