Unraveling the Housing Crisis: Soaring Prices, Plummeting Sales, and the Struggle to Afford

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The housing market is in turmoil as median house prices took a sharp 17.6% dip in October, plummeting to $409,300 compared to the previous year, according to Reuters. Home sellers, grappling with the fallout, are slashing their asking prices as prospective buyers face insurmountable challenges securing approval amid soaring rates and prices.

Disturbingly, the income required to afford a typical home in the United States has surged to a record 41.4% in 2023, a stark rise from 21.1% in 2012 and 28.5% in 2020, as reported by Redfin. When viewed on a post-tax basis, homebuyers find themselves allocating nearly 60% of their income to meet home payments.

The reality is stark: to maintain affordability and spend 30% or less of income on home payments, a homebuyer must earn a minimum of $110,000 annually. The question echoing across the housing landscape is: How sustainable is this situation?

As the crisis deepens, pending home sales hit an unprecedented low, dropping by 8.5% since October of the previous year—marking a record worse than the financial crisis, according to CNBC. The confluence of soaring prices, dwindling sales, and the growing struggle for affordability paints a grim picture of the current housing crisis, leaving many to question the long-term viability of the market.

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