A little less than a decade after the great housing bubble collapse, US home prices have surpassed their previous all-time high. Is this good news? Yes and no.
According to an article on Zerohedge, it turns out that rising home prices may be a double-edged sword. With all things being equal, rising home prices are great for current homeowners. This is especially true for middle class Americans who’s greatest asset tends to be their home.
Where the problems are starting to creep up is in the relationship between home value and income. As we’ve previously discussed, home prices are increasing steadily. However, average wages aren’t growing at quite the same pace.
The result? Homes have never been less affordable for first-time home-buyers. As the chart below illustrates, there’s a widening gap between new home sale prices and median household income.
If incomes fail to match up with the rise in US home prices, new home buyers will see a gap between the average cost of their prospective home and what their income will allow them to afford.
Hope on the Horizon
It should be noted that these are averages. As the saying in real estate goes: location, location, location. Not all housing markets are created equal and some are more affordable than others.
For example, millennials are flocking to mid-west states due largely to lower home prices than their coastal cousins. Millennials in particular are moving to the inner part of the country.
This is where City vs City can come in handy. First-time home-buyers may be wary of the current state of US home prices. However, with interest rates still relatively low there may never be a better time to buy than right now.
City vs City is a powerful tool for seasoned homeowners and first-time buyers alike. With our app, you compare your current city to the city you’d like to move to. Compare income, expenses, taxes, and more.
With City vs City, you have the tools you need to make an informed choice on your next move. See your true cost of living and discover cities where you’ll get more bang for your buck.