I know it, and you know it — buying a home has never felt this unaffordable.
For years, prospective buyers have faced a punishing mix of too few homes for sale, high mortgage rates, and persistently high home prices. Those pressures have pushed homeownership out of reach for many Americans. Unfortunately, affordability could get even worse in the years to come.
At an economic forum during the National Association of Real Estate Editors conference in June, National Association of Realtors chief economist Lawrence Yun told a room full of journalists that he expects the median single-family home sale price to reach $1 million by 2050.
For comparison, the median sale price of an existing home was $429,300 in June, according to NAR data. Yun told Business Insider that while his 2050 forecast is speculative, it is based on steady annual home-price growth of 3% to 4%.
“It’s worth looking back: for example, back in 1990, the median national home price was barely above $100,000,” Yun said. “At that time, people would not have envisioned that today’s home prices could be $400,000.”
He pointed to San Francisco’s housing market as another example. “In San Francisco, a million-dollar home is very common today, but back in 1990, the median home price in San Francisco was about $250,000, and I’m sure no one was thinking about a million,” Yun added.
Yun’s forecast is sobering, especially as some parts of the real estate market appear to be normalizing. Home-price growth has slowed in formerly hot markets like Austin and San Diego, while new home construction in smaller markets like Kaufman, Texas, and Harnett, North Carolina, has helped boost sales.
Yun said those cities are outliers in a national real estate market still defined by climbing prices and soft demand.
“Places like Austin, or any local market, will deviate from national trends for some time. But Austin’s price decline is pretty much due to the fact that it had a spectacular run-up,” he said. “One wonders, after a little pause in Austin, whether it will begin to show that superstar status again.”
Yun said it will take years of steady gains for the US median single-family home sale price to reach $1 million. For now, he expects prices to rise only moderately.
“In the short term, I think home prices will see a very minimal gain this year — maybe 1%, 2%, or 3% nationwide,” he said. “That would be below consumer price inflation and below income growth, since incomes are rising around 3% to 4%. I think home-price growth coming in slightly below income growth is a healthy thing.”
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