Middle-Class Housing Affordability Crisis: Two Americas Emerge

Middle-Class Housing Affordability Crisis: Two Americas Emerge 

The contemporary middle class is experiencing a significant shift compared to just a few years ago, particularly due to a sharp rise in inflation that has made the standard of living unattainable for many families. This inflation isn't just affecting consumer goods and services but also impacting the prices of assets like housing.

There's a growing concern that homeownership, once a fundamental aspect of the American Dream, is now out of reach for ordinary Americans. To explore this issue, Creditnews Research conducted a study on income distribution and housing costs across the 100 most populous metropolitan areas in the United States.

The study uncovered a stark division between two Americas: one where middle-class families can still afford an average home and another where they're entirely priced out. While there are still some affordable areas across the country, their number is declining rapidly.

Key findings from the study reveal that in 2024, only 52 out of the top 100 metro areas are affordable for the middle class, down from 91 in 2019. Additionally, the lower-middle class is priced out of 93 of the top 100 metro areas, up from just 33 in 2019.

Affordable metros for middle-class families are primarily situated in the Midwest, Rust Belt, and parts of Texas, while the least affordable ones are concentrated in California and the Tri-State Area.

The study defines income tiers based on Pew Research's household income percentile ranges and assesses affordability by calculating the minimum annual income needed to qualify for a mortgage on a typical home in each metro. It's found that while the upper-middle class can afford homeownership in 87 of the top 100 metros, the lower-middle class is limited to only seven.

The most affordable metros typically require a household income below $70,000, while the least affordable ones demand incomes exceeding $155,000.

Overall, the housing market presents a tale of two Americas, with the Midwest and parts of the South offering affordability, while coastal cities remain out of reach even for affluent buyers. Factors such as housing supply shortages, rising mortgage rates, and soaring home prices contribute to this divide.

Efforts to address the housing affordability crisis include proposed tax credits and initiatives from the Biden administration, along with plans to convert empty office spaces into residential units. However, the future of housing affordability remains uncertain, with many metro areas becoming increasingly inaccessible to the middle class.