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Prospective Buyers Set to be ‘Priced Out’ From Homeownership

The National Association of Home Builders (NAHB) released its 2020 priced out estimates report and it casts an ominous shadow over the future fate of home prices. Data shows that if the average price for a new home raises by just $1,000, at least 158,857 homeowners would be entirely priced out of the housing market. 

According to the report, homeowners would no longer be able to qualify for the mortgages based on their current incomes. These statistics stretched across the nation, showing that although the homeowners would have been able to quality before the increase, following the rise in home prices, they were kicked out of contention.

The report also broke down the states and metropolitan areas would be most affected by this pricing out predicament, as it varied widely across the nation. This wide-scale makes sense, as most of the factors that contributed to certain areas being priced out more than other involved the sizes of the local population living within the areas, as well as the affordability of the new homes. 

Texas accounted for the most priced-out consumers following a $1,000 home price increase. This means that an estimated 14,143 households could be tossed out of market viability. The Lone Star State was followed by Florida, which boasted a stat of 10,274 households being priced out, and then California, which posted a stat of 8,870 households being affected.

As for the metro areas experiencing the most pain in the priced out arena, according to the numbers, the New York-Newark-Jersey City demographics showed that 6,172 households would be rendered incapable of qualifying for a mortgage on a new home purchase with the same $1,000 increase in price tag. Experts explained this result due to the fact that this metro area already boasts hefty, near beyond reach home prices that are only affordable to roughly 13% of the population before the price increase. Hence, following the $1,000 increase, there were barely any of the remaining households that would qualify for mortgages. Add to this the fact that the New York metro area also happens to be the largest populated, boasting 7.4 million households, the numbers speak for themselves. 

The other metro areas that followed fast on the heels of New York and its surroundings included Chicago-Naperville-Elgin, Illinois, then Houston-The Woodlands-Sugar Land, Texas.

About Author: Andy Beth Miller

Andy Beth Miller is an experienced freelance editor and writer. Her main focus is travel writing, and when she is not typing away from her computer at her home in the Hawaiian Islands, she is regularly roaming the world as a digital nomad, and loving every minute of it. She has been published in myriad online and print magazines, is a fan of all things outdoors, and finds life (and all of its business, technological, and cultural facets) fascinating in their constant evolution. She is excited to spectate as the world changes, and have a job that allows her to bring a detailed account of those constant shifts to her readers at home and abroad.
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