2016 was initially predicted to be a rosy year for the real estate market. However, a recent report suggests that the number of homebuyers this year may drop if home prices continue to increase while wages remain stagnant. Can first-time homebuyers still get their dream home in this case?
Housing prices across the U.S. are increasing at a faster pace, which may become a problem for those who are looking to buy a home this year, Realtor.com reports. A recent study from RealtyTrac shows that about 30.2 percent is spent by an average worker on mortgages, property taxes and insurance premiums alone.
This could become a problem for first-time homebuyers who are looking to score a deal this year. Housing prices are said to be increasing at a rate of about 1 percent each month, which makes it more difficult for first-time homebuyers to afford.
As previously reported here on Realty Today, more Americans are already choosing to rent than to purchase their own homes because of the increase in the prices of houses in the U.S.
Add this to the fact that while housing prices are rising at a fast pace, wages are not keeping up with the increase.
"We're heading in a direction where people are no longer going to be able to afford homes," said RealtyTrac spokesman Daren Blomquist.
The data was gathered from the U.S. Bureau of Labor Statistics to determine the wage from the third quarter of last year along with the housing prices for the first two-and-a-half months of this year. The good news, however, is that first-time homebuyers can still score a great deal and afford to buy their own home because of the lower interest rates on mortgages.
Residents of Denver are said to be the most affected by the increase followed by New York; Omaha, NE; Austin, TX; San Francisco; and St. Louis. The most affordable counties, on the other hand, were found to be in Boston; Baltimore; Birmingham, AL; Providence, RI; and Chicago.
