U.S. Housing Affordability Reaches Levels Not Seen Since the 2008 Crisis – Insights from Creative Planning’s Charlie Bilello

Current Affordability Crisis: The U.S. housing market faces a significant affordability crisis, with a 57% gap between median household income and the income needed to buy a median-priced home, requiring households to spend 47% of their income on housing.

Price Growth Trends: Home prices have surged by over 53% in the last five years, far exceeding wage growth, with cities like Miami, Tampa, and Charlotte experiencing increases of up to 80.5%.

Historical Context: Current home prices are 118% above inflation, a stark contrast to historical trends where prices rarely outpaced inflation by more than 30%, raising concerns about potential market corrections similar to those seen during the 2007-2011 period.

Future Projections: Experts predict that home price appreciation will align more closely with inflation rates moving forward, which could help address the affordability gap, although the timing and specifics of this correction remain uncertain.