The news hasn’t been good, but that may be changing.
It’s a question that gets many aspiring homeowners perspiring: How can mortgage rates be so low while home prices are so high?
According to the federal government, homeownership peaked at 70 percent in the first quarter of 2005 and has since plummeted to the low 60s.
Now, however, one new study is questioning that common wisdom. On the last day of August, a real estate company called Redfin crunched some numbers and declared, “Across 40 large U.S. cities, 55 percent of homes for sale last month were both affordable and big enough (two to four bedrooms) for a working class household.”
Of course, some of those cities aren’t exactly tourist destinations, with Detroit and Cleveland leading the way in housing affordability. It’s also no surprise that San Francisco was the least affordable city, with only 3 percent of its homes available to working class homebuyers.
“It’s tough to find affordable homes for sale in the neighborhoods where people with higher incomes tend to live,” Redfin analyst Eric Scharnhorst says. “It’s like looking for a needle in a haystack. Neighborhoods with a healthy mix of incomes and home types cover just 13 percent of our cities.”
And that’s really the problem, Scharnhorst says.
“The solution is a mix of inventory with homes for people of all incomes, even in the same neighborhood,” he says. “It’s about more than just affordability. We’ve found that when people of various incomes live in the same neighborhood, everyone benefits.”
Until city governments, urban planners, and private developers figure that out, what can you do if you’re looking for a reasonably priced family home? Consolidated Credit offers homebuyer education and counseling, and best of all, it’s free. You can also call 1-800-435-2261 to speak with a HUD-certified housing counselor today.