An economic imbalance in the US economy is growing as wages are not catching up with the rising inflation and home prices. While home buyers with a median income of $75,939 could afford to buy a house in 2020, the same moved up the ladder to a salary of $110,871. In 2024, only people who earn more than $110,000 can consider owning a home in the US. What needed a five-figure salary to own a house through a mortgage in 2020, now needs a six income figure in 2024.
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US Economic Imbalance: Wages Remain Stagnant But Home Prices Race Ahead
The housing market in the US skyrocketed by 45% between 2020 to 2024. As soon as the markets recovered from the COVID-19 lockdowns, prices shot up drastically. Home mortgage interest rates are at an all-time high making it unaffordable to buy a property across the US as wages are not catching up.
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The average hike in wages in the last four years is only 7%, data from Fox News shows. In contrast, home prices in the US spiked 45%. The imbalance between wages in the US and home prices is seen in the markets in 2024.
Here’s the average yearly wages you need to consider to own a median home in the US in April 2020 vs April 2024:
April 2020 – $75,939
April 2024 – $110,871
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The US home prices will not come down anytime soon and will only move upward, predicts Bankrate analyst Jeff Ostrowski. He explained that the US home market will become unaffordable making it hard for the working class to own a property, as wages will not match up.
“There’s no sign that things will get better for buyers. It’s hard to envision any type of price correction coming,” he said. “The consensus was that mortgage rates were going to be down below 6% by the end of this year. And that’s just not happening,” he summed it up.