July 26, 2022
By Thomas Kwan
The housing crisis in America is becoming endemic to our country. As 61% of Americans lack access to affordable housing in their city, the problem has reached nationwide status.
The United States has a housing affordability problem in the most populated towns and cities, with renters saving up money for years but unable to make a down payment for an average American home. Data shows the cost is seven times the average household income. According to Porch.com, a website connecting homeowners with local home contractors, this data also showed that 90 percent of people in 13 cities could not afford a home.
Porch data suggests out of those 13 cities, ten were in California, to no surprise. In Los Angeles, only 4% of renters can afford a home in the city of angels. The 260 most populated metros were analyzed, showing that home prices were much higher than renters could afford. A down payment on an average home, its mortgage repayments would be more than 30% of its income. Homeownership is financially impossible for three out of four metropolitans, which is 71% of areas in America, according to Porch.
“Because the housing market continues to be incredibly tight, it’s going to mean that first-time homebuyers in the millennial and Gen Z generation will likely be stuck in the rental game for a longer period of their lives than previous generations,” said a Porch spokesman to The New York Post.
Coastal cities make up a good majority of least affordable cities, with states of Hawaii, Massachusetts, and Colorado. Less affordable areas are the metros in New York, New Jersey, and Pennsylvania. Estimates suggest that 81% of renters cannot buy a house, according to Porch. Other cities where renters could not afford a home are Washington, DC, Raleigh, North Carolina, and Tucson, Arizona. This catch-22 of a problem increases as the struggle for home ownership leads to struggling rentals.
“The housing shortage will have a ripple effect that will also impact the availability of rentals, heightening demand and driving rental prices up and perhaps preventing lower-income renters from living in the neighborhood they desire,” said the Porch spokesperson.
The raised demand for the need of rentals, and the lowered supply, have increased prices up to all-time highs, preventing many lower-income renters from living in their desired neighborhood or finding housing at all. With 72 million people, the Millenials are the largest sector in the housing market, struggling the most compared to other generations.
“They are placing considerable pressure on the housing market as they look to enter,” the Porch spokesperson.
“These are challenging circumstances for young Americans looking to establish roots – and nothing quite like those that prior generations have faced,” said the Porch spokesperson. “Interest rates have been incredibly low throughout the pandemic, and stimulus money has been put in people’s pocket as well, helping them afford a down payment or the earnest money they need to secure a mortgage. Combine this with disruptions to the supply chain and a labor shortage in the homebuilding industry, and you can begin to see some of the reasons why there’s a housing crisis.”
With tremendous pressure on the American housing system by the sheer mass of first-time homebuyers and renters and low average wages, many millennials and other generations struggle to buy a home.