Is this really a “soft landing?”

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U.S. housing affordability is worse than the peak of the 2006 housing bubble

After a modest improvement in 2023, America’s housing affordability crisis is seemingly getting worse with each passing month.

Using data from the Atlanta Federal Reserve Bank, macro strategist Charlie Bilello showed that the typical American household would need to spend 43.8% of their income to afford an average home in today’s market.

While it’s lower than the peak of 45.3% in 2022, it’s a notable rise from one year ago when average housing payments represented 40.4% of income.

For another comparison, housing payments as a percentage of average income peaked at 42% in 2006. This was during the housing bubble that preceded the 2008 financial crisis.

Before the pandemic, the typical household would need to spend roughly 30% of their income to afford a home.

 

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