Home affordability hits a record low in 2024. Discover why rising costs and stagnant wages are reshaping the buyer journey—and what to do about it. As someone who’s been tracking real estate cycles for over a decade, I can tell you—this isn’t just another affordability dip. This is a structural shift, and it’s reshaping who can buy, where they can buy, and when. If you’re wondering why your dream home feels further out of reach in 2024 than ever before, you’re not alone—and you’re not imagining it.

Home Affordability Hits Record Low: What Today’s Data Reveals

A new JPMorganChase Institute report, highlighted by Realtor.com in June 2024, reveals a sharp rise in the financial burden of homeownership—especially for first-time buyers aged 25–44. Compared to 2019, the average buyer now spends 45% more of their income on mortgage payments.

Home prices have surged by 50% in just five years, and interest rates have doubled mortgage costs. As a result, monthly mortgage payments are up by an average of $600, according to data from the Federal Reserve Bank of St. Louis. And despite rising wages, they haven’t kept pace—leaving many priced out of the market.

What This Means for the Market: 4 Key Insights

1. Mortgage Payments Are Outpacing Wage Growth

Even with wage increases across many sectors, they’re simply no match for the twin hit of rising home prices and higher rates. A $600 bump in monthly payments might not seem catastrophic on its own—but stretched over 30 years, it’s a wealth gap in disguise.

2. Home Affordability Stress Is Spreading to the Suburbs

Historically, the suburbs offered relief when city prices spiked. Not anymore. Remote work enabled a flood of demand in smaller towns and rural areas—driving prices up in places that weren’t prepared for it. The affordability gap has gone nationwide.

3. Buyer Fatigue Is Real—and Inventory Is Piling Up

With fewer buyers able to qualify or compete, inventory is quietly rising. This isn’t the inventory flood of 2008, but it’s a clear sign: the demand side is cooling, not because people don’t want homes—but because they simply can’t afford them.

4. First-Time Buyer Demographics Are Shifting

The median age of first-time homebuyers has reached a record high, reflecting a delayed path to ownership. This delay has long-term effects—not just on families, but on wealth building, retirement readiness, and economic mobility.

What Can Buyers and Investors Do Now?

• For First-Time Buyers Rethink location priorities. Emerging midsize metros or overlooked regions may offer better entry points. Partner with local agents who understand micro-market trends.
• For Investors: Keep an eye on rental demand in previously owner-dominated markets. As buying gets harder, more people will rent longer—creating potential opportunities for well-managed multifamily units.
• For Sellers: Price realistically. Sentiment is shifting. Overpricing in a high-rate environment may lead to stagnation. Focus on turn-key appeal and location-based value.

Quick Topic Explainer:

What is “Housing Affordability”?

It’s a measure of how much of a person’s income goes toward housing expenses—especially mortgage payments. Economists generally consider housing affordable when these costs are under 30% of gross income. Right now, many are exceeding that threshold by a wide margin.

A Smarter Way Forward

I always tell buyers: you can’t time the market, but you can time your strategy. While national affordability looks bleak, local trends still vary widely. Use data, not headlines, to guide your decisions. Platforms that offer market-by-market insights—especially those integrating AI or behavioral data—can give you a real edge.

Need Clarity? These Quick Answers Can Help

Should I wait for prices to drop?

Prices may plateau in some regions, but major drops are unlikely unless rates rise dramatically or economic conditions change.

Will rates come down soon?

The Fed remains cautious. Expect gradual shifts, not dramatic reversals. Plan for rates to stay elevated in the short term.

Is renting the smarter choice right now?

In many high-cost areas—yes. If renting lets you save or invest elsewhere, it’s not a setback—it’s a strategy.