Median incomes have only risen by 23% over the same period, leaving many people unable to enter the housing market. In 2020, a household earning $59,000 per year could afford a typical home priced at $240,815. At that time, this income level was below the US median income of $66,000, meaning more than half of American households had sufficient funds to buy a home without overextending their budgets.

Today, those shopping for a home need to earn $106,000 annually to afford a median-priced home at $342,941. This is $47,000 more than they needed to earn in 2020 to afford a home and well above the current average income of $81,000.

A recent Zillow analysis has shown how difficult it has become to break into homeownership as the cost of purchasing a home has outpaced income growth, pushing hopeful buyers out of the market. In fact, only a handful of major metropolitan areas were found to be affordable at the median income. Zillow defines affordability as spending no more than 30% of your income after offering a 10% down payment.

Monthly mortgage payments have nearly doubled over the past four years, with today’s typical buyer facing a monthly payment that is 96% higher compared to 2020 levels. This equates to an average payment of $2,200 per month with a 10% down payment.

The main factors behind this increase are the significant rise in home values and mortgage rates. Mortgage rates have gone up from around 3.5% in early 2020 to between 6.5% and 7% so far this year. Limited housing supply has also contributed to the issue.

In 2023, buyers needed an income of $97,000 to afford a typical home, up from $86,000 in 2022. This was $22,000 above last year’s median household income of $75,000.

“The income needed to comfortably afford a typical home is now six figures,” said Orphe Divounguy, chief economist at Zillow. “It’s a big increase that’s due to a combination of higher prices, mortgage rates, and limited supply.”

Neither mortgage rates nor home prices are expected to ease anytime soon, with economists from Fannie Mae predicting rates to drop to 6% by the end of the year and Zillow forecasting home prices to increase by 0.9% over 2024 to an average of $349,611.

Younger buyers are also facing challenges, as the pressure of affordability has delayed their entry into homeownership. It now takes 8.5 years for a household making the median income to save enough for a 10% down payment, a year longer than it would have in 2020. The average age of first-time homebuyers has also risen from 31 to 36 in the past five years.

To overcome these hurdles, buyers are turning to strategies such as “house hacking” and seeking financial assistance from friends and family. In 2023, 21% of those who purchased reported getting financial help from friends or family, according to Zillow.

In conclusion, the affordability of homes has significantly decreased in recent years, with the income required to purchase a home outpacing wage growth. This has resulted in many prospective buyers being priced out of the market and forced to employ creative strategies to afford a home.

Article generated from corporate media reports.

Since January 2020 when the Wuhan coronavirus (COVID-19) “pandemic” was first launched, the average monthly mortgage payment has nearly doubled, increasing by 96 percent in just four years. Back then, a typical buyer paid just under $1,100 a month for a mortgage with 10 percent down – today, that average has ballooned to $2,200 a month, which is well above the 30 percent of median income that was once thought to constitute an “affordable” housing cost in America.

The average 30-year fixed-rate mortgage is around seven percent, and despite promises that rates will soon go down, it does not appear that this will realistically happen anytime soon unless the country wants to see massive hyperinflation.

What are today’s young people supposed to do? Not much other than slave away in vain while those with all the assets continue adding to their stockpiles. Welcome to third-world America, compliments of Wall Street and the private central banking cartel known as the Federal Reserve.

America is done

Whenever the system finds itself in a financial bind, the powers that be typically flood the market with more cash. This creates an inflationary trend that benefits Wall Street but not Main Street, the latter being the bread and butter of what makes up a true economy.

The economy of America today is fake in that it is mostly just paper “money” circulating around that creates an illusion of value and wealth. When you pull back the curtain, you find that many Americans are up to their eyeballs in debt, and even corporate America is seeing major delinquencies at an ever-increasing rate.

Try as they might to keep the stock market propped up and always-climbing, in today’s climate primarily with just one big stock, Nvidia, the truth is that the emperor has no clothes. The American empire is dying, which is why the war drums are beating louder and louder all around the world.

To even be able to afford just a modestly-priced, average-sized home in America today, one must make at least $106,000 per year. Back in 2020, that figure was just $59,000 per year.

And how about fast food? The overrated burger chain Five Guys now charges more than $20 for a meager burger, fries and drink. This, despite continued claims from Washington that things are looking on the up and up.

February 2024 marked the worst February for layoffs since Challenger, Gray & Christmas first started keeping records. This is a sign that the labor market is deteriorating as well amid rising inflation and interest rates.

Challenger, Gray & Christmas found that companies planned a whopping 84,638 job cuts in February, a three percent increase from the month prior and a nine percent increase from the same time last year.

“It marked the highest layoff total for the month of February in data going back to 2009,” one report explains.

It turns out that even college-degreed young people with strong drive and motivation are unable to find any kind of viable position to start a life. This as rent prices soar, leaving them jobless, homeless and ultimately hopeless.

What does the next generation of Americans have to look forward to? Not much. Poverty, joblessness, homelessness, and apparently bug-eating are the only thing on the menu for them. So much for being the land of opportunity.

The American economy is running on fumes. Find out more at Collapse.news.

Sources for this article include:

• ActivistPost.com
• NaturalNews.com

The chart, which was withdrawn after widespread protest, sought to identify the characteristics needed to build not only an economy but civilization itself with a racist culture. Thus, the kind of lifestyle and values that might culminate in someone having high credit scores and saving up for a significant down payment for a house were something not to be emulated or praised, but rather to be called out and declared shameful.

Although the chart no longer is found on the Smithsonian website, the mentality that created it lives on in the policies of the Biden administration. To show its commitment to equity—equal outcomes—the Federal Housing Finance Agency (FHFA) implemented a new policy on May 1, 2023, that punishes homebuyers with high credit scores who can put down at least 15–20 percent on a mortgage by making them pay higher interest rates and extra fees. Declares a Wall Street Journal editorial:

According to calculations by Evercore ISI, buyers with strong credit scores between 720 and 739 who make 15%–20% down payments will see their rates increase by 0.750%. Borrowers who put down 20%–25% will see rates increase by 0.500%.

The winners are borrowers with weak credit scores—that is, riskier borrowers. Under current FHFA policy, a borrower with a weak credit score below 620, who is borrowing more than 95% of the value of their home, pays 3.750%. Under Ms. Thompson’s new plan, those borrowers will see their fees decrease by 1.750%.

Not surprisingly, commentators like James Bovard have rightly attacked this policy as one that imposes perverse incentives, turning the rewards for creditworthiness upside down. Bovard writes:

Starting May 1, The Post exposed last week, a Biden administration decree will require adjusting mortgage calculations to penalize homebuyers with a FICO credit score of 680 and above—almost two-thirds of the population.

This levy will be used to reduce costs for people with low credit scores—i.e., risky borrowers more likely to default on mortgages.

However, this is not merely another version of the Law of Unintended Consequences, in which well-meaning government officials implement a policy without looking at the so-called bigger picture.

The consequences here are intended. The Biden administration officials know full well the implications of this new policy and is sending the message that the notion of creditworthiness itself is implicitly racist.

As Newsweek points out, the racial gaps in home ownership and credit scores are significant:

Only about 25 percent of homebuyers with Federal Housing Administration loans are people of color, according to the White House. Black and Hispanic people, on average, have fewer savings to use as a down payment on a home and tend to have lower credit scores, according to David Stevens, former CEO of the Mortgage Bankers Association (MBA) and a former FHA commissioner during the Obama administration. The current policy is being rolled out by the FHFA.

He told Newsweek that this can be attributed to factors like distrust in the banking system or being a first-generation American. He added that low credit scores can be a significant barrier to homeownership.

But in order for the FHFA to close the gap by bringing down LLPAs [loan-level price adjustments] for those borrowers, the agency will compensate for the reduction in borrowing fees by raising the LLPAs of borrowers with higher credit scores, who tend to be white.

The average credit score in white communities was 727 in 2021, compared with 667 in Hispanic communities and 627 in Black communities, according to data analyzed by FinMasters, a personal finance blog.

Not surprisingly, the Biden administration blames the homeownership gap on racism, so its proclivity is to punish the people who saved their income and engaged in forward-looking behavior, something the Smithsonian condemned as a product of “whiteness.” However, as Bovard points out, black homeownership rates relative to white rates are lower today than they were more than fifty years ago: “Federal Housing Finance Agency Director Sandra Thompson testified to Congress last year that the racial homeownership gap ‘is higher today than when the Fair Housing Act [of 1968] was passed.’”

That is hardly insignificant. In 1968, the United States was just beginning to shed Jim Crow laws, and prospective black homeowners had far fewer financing opportunities than they do today. Furthermore, homebuyers were expected to put at least 20 percent down, with only some exceptions, so one might consider lending policies at that time to have been far less friendly to black borrowers than they are today.

Furthermore, the Bill Clinton, George W. Bush, and Barack Obama administrations had policies explicitly aimed at increasing homeownership among blacks and other minority groups. Bush claimed his administration had put a record number of black Americans in their own homes by helping to provide down payments and lowering interest rates, among other policies.

Andrew Cuomo, the Clinton administration’s housing and urban development secretary, declared that the homeowning gap between blacks and whites was due to discrimination and ordered mortgage lenders to lower lending barriers for black households. Cuomo wrote:

The American Dream of homeownership is not reserved for whites. We will not tolerate a continued homeownership gap as wide as the Grand Canyon that divides Americans into two societies, separate and unequal. Eliminating housing and lending discrimination is vital to making the opportunity for homeownership a reality for all Americans.

Of course, the Bush administration’s all-out push to increase black and Hispanic homeownership rates had its own unhappy ending: the 2008 financial meltdown. All the Bush administration’s efforts to increase minority home ownership blew up as home prices plunged and many homeowners defaulted on their mortgages and lost their homes. Writes Bovard: “Thanks to the housing crash, the median net worth for Hispanic households declined by 66 percent between 2005 and 2009 and the median net worth of black households declined by 53 percent.”

Moreover, in a 2004 article in Barron’s, Bovard warned that the Bush housing policies were going to have an unhappy ending:

One of the proudest elements of President Bush’s “compassionate conservative” agenda has been government financial support to home buyers for down payments. Bush is determined to end the bias against people who want to buy a home but don’t have any money. But he is exposing taxpayers to tens of billions of dollars of possible losses, luring thousands of moderate-income families into bankruptcy, and risking the destruction of entire neighborhoods.

Bovard’s words were prophetic. But at least Bush didn’t blame borrowers with high credit scores and large down payments for the racial housing gaps.

The Biden administration, on the other hand, has expanded the definition of “intersectionality” to include the claim that whites (along with non-whites who have high credit scores) are to blame for minorities’ low credit scores and shakier finances. The Biden administration’s policies continue what Bovard called “wrecking ball benevolence.” Former federal Judge Janice Rogers Brown concurred, writing: “Whether the road was paved with good intentions or greased by greed and indifference, affordable housing turned out to be the path to perdition for the U.S. mortgage market.”

Economically, none of this makes sense, but one must understand that the Biden administration is not looking to promote working markets in housing. Instead, it is claiming that the only cause of the gap in homeownership between blacks and whites is white racism and that the government must engage in extraordinary means to eliminate this gap, even if this requires turning economic logic upside down.

One does not have to be a seer or have a doctorate in economics to know that this latest iteration of federal housing policy will end in failure just like all the other housing initiatives for minorities. But don’t blame the Law of Unintended Consequences. This new policy is deliberate, and when it fails (as it surely will), look for Biden or whoever else is in the White House to call for even more drastic measures.

About the Author

William L. Anderson is Senior Editor at the Mises Institute and professor emeritus of economics at Frostburg State University in Frostburg, Maryland.

Article cross-posted from Mises.