The American Dream of Owning a House Becomes Harder to Obtain
Housing prices continue along a 12-month rise in June, reporting a 5.8% annual gain, up from May’s growth rate of 5.7% and ahead of economists’ speculation.
The S&P Dow Jones Indices released the latest results for the S&P CoreLogic Case-Shiller Indices, which once again demonstrated that among many of America’s most desirable urban areas, the price of housing continues to rise at a rate that many workers simply cannot hope to match.
“Price increases are supported by a tight housing market,” said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, in a press release.
“Both the number of homes for sale and the number of days a house is on the market have declined for four to five years. Currently, the months-supply of existing homes for sale is low, at 4.2 months. In addition, housing starts remain below their pre-financial crisis peak as new home sales have not recovered as fast as existing home sales.”
“Rising prices are the principal factor driving affordability down,” Blitzer added, although he did mitigate this assessment by claiming that wages were rising in tandem and that unemployment is low.
Still, for many Americans who both want to achieve the symbolic dream of owning their own home as well as the practical goal of acquiring equity that they can then pass down through generations to their children in order to accumulate wealth, the rising prices are becoming prohibitive.
In one index covering 20 U.S. cities, Seattle, Portland, and Dallas reported the highest year-over-year gains with 13.4%, 8.2%, and 7.7%, respectively. These huge numbers are once again indicative of a booming housing market in some of America’s most desirable cities, but this comes at the cost of pricing out poorer would-be residents. In fact, for first-time homebuyers, the market only grows more and more distant every day.
The problem is exacerbated by the growing prominence of cities in the American workforce. Money and jobs are flowing to the coasts and major hub cities while smaller towns and rural America struggle to keep up. But with housing costs continuing to rise at an extraordinary rate in urban areas, there is little option for those living on the margins.
While current homeowners benefit from the housing price increase, the divide between the haves and the have-nots only continues to grow.
“THE S&P CORELOGIC CASE-SHILLER NATIONAL HOME PRICE INDEX RISES AGAIN TO ALL TIME HIGH,” S&P Dow Jones Indices, August 29, 2017.