If you are currently renting a home, you may find it very difficult in the future to become a home owner. Why? Well, housing prices have boomed and our nation is already in somewhat of a new housing crisis! The price to own a home has reached a new record high across the nation and this means means that houses become less and less affordable for those wishing to become a home owner.
According to some housing economists, this situation could worsen under the administration of President-elect Donald Trump. The Busines Insider reported that Trump proposed to loosen mortgage lending standards in a speech to the National Association of Home Builders (NAHB) in August.
Over the past few years, housing prices have risen and are steadily rising at a much faster rate than wages. If you didn’t own a home prior to the start of this bubble, you’ll most likely end up spending more of your take home income to simply to pay for a place to live.
This boom in housing prices will not just affect those in the market to purchase a new home. We can expect rents to go up too, including in social housing.
According to the S&P CoreLogic Case-Shiller Index, housing prices have surpassed the housing price peak set in July 2006. The nation’s 20 largest cities reported a 5.1 percent annual gain and interest rates jumped from 3.5 percent to 4.25 percent on the 30-year fixed loan.
In May of this year, Lawrence Yun, chief economist of the NAR told CNBC, “We are seeing flashing yellow lights on affordability. People who are currently renting and want to convert into ownership — major difficulty. Home prices are rising way too fast compared to people’s income and wage growth.”
Read more on the US home prices new peak here.