Housing Becoming Less Affordable for Americans

The revival of the housing market after the major crash of 2007 has been viewed from an optimistic perspective so far. However, a recent analytical study carried out by researchers of the online real estate database Zillow has shown that housing, especially in the major metro areas of the United States, is becoming less affordable for the average consumer. According to the analysts, a new housing bubble is on the making even though it is not growing at a high rate.

The study has revealed that over 50% of the properties currently listed for sale in Los Angeles, San Francisco, San Diego, Portland, Miami, Denver and San Jose are unaffordable for local residents. At the same time, approximately 33% of all homes in these areas are unaffordable by historic standards.

The researchers have come up with the numbers by using housing value, income and mortgage data from the final quarter of 2013. They analyzed the percentage of the median income in the area required for affording the monthly mortgage payments on a median-priced single-family home. The compared this percentage to the same percentages for the years before the forming of major bubbles in the US housing market.

The general conclusion is that many homes are unaffordable to residents of the metro areas by both current and historic standards. In order for consumers to find affordable housing, they have to search for properties in areas further away from metro areas. Consumers are struggling with finding house financing as well. Even though mortgage rates still remain at historic lows, most consumers find it difficult to save sufficiently for making a large down payment. This makes home loans more expensive and poses a greater risk of default. Additionally, more and more consumers are searching for financing solutions outside of the mainstream options and this poses considerable risks as well.

Housing is expected to become even less affordable for the majority of consumers as mortgage rates are on the rise.

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