A consulting firm, Oxford Economics' recent analysis has shown that high mortgage rates and escalating prices have caused house payment rates to skyrocket faster than salaries during the last five years. It noted that only a mere 36% of households could afford to purchase a house in the third quarter compared to 59% in 2019. Nevertheless, smaller cities like Decatur, Illinois, Youngstown, Ohio, and Charleston, West Virginia, portrayed a different picture. Here, a typical salary could still buy a standard house, and less than $60,000 was required to afford one. The data accentuated the longstanding housing crisis that exacerbated during the COVID-19 period. It indicated that affordability is attainable for individuals willing to abandon the congested cities. The examination discovered a nationwide need for a family to earn $107,700 to afford a standard house in 2024's third quarter. This is roughly twice the necessary income of 2019. The median home sold for $408,900 in this quarter, which is a 49% increment over five years. However, in Decatur, the most affordable city according to Oxford's ranking, the median home cost $134,200 as per Realtor.com figures. Decatur-based real estate agent Megan Jesse noted the affordability of living in Decatur and how people are finding jobs there. The least affordable market was found to be San Jose, where a typical home came with a $1.3 million price tag. Here, fewer than 15% of households earned above $450,000, the comfortable house-buying range as per Oxford. Places like Decatur offer affordability due to reasons such as a higher unemployment rate and factory closures leading to low-priced listings by relocation specialists. The state of affordability in future years is significantly contingent on fluctuating mortgage rates. The hike in mortgage rates from record lows during the pandemic to their current level of almost 7% accounted for most of the housing cost increase as per Oxford's report. The firm's economists anticipate rates to descend in the upcoming months considering the receding high inflation and the Federal Reserve's lowering of the rate. However, with Donald Trump's presidency and proposed policies like tariffs and mass deportations, this picture is further blurred as these could potentially fuel inflation and mortgage rates.
Affordable Housing Still Exists in America's Smaller Cities, Says Oxford Economics Report
Despite the nationwide soaring house prices, smaller US cities still offer affordable housing options, reveals Oxford Economics.
