The State of Housing Affordability in the US: A Glimmer of Hope in 2024
The US housing market has been a source of significant frustration for both homebuyers and renters in recent years. However, 2024 brought a slight improvement in affordability, offering some relief to those seeking a place to call home. This year, despite high mortgage rates and inflated home prices, data from Realtor.com indicates that many major US cities experienced a reduction in the percentage of income spent on housing. For both buyers and renters, this means a bit more financial breathing room, though challenges remain.
The Rental Market: A Mixed Bag for Renters
The rental market has been particularly volatile since the pandemic. Renters saw a steady decline in rent prices from their post-pandemic peaks, but costs remain higher than in 2019. However, Realtor.com’s data shows that median rent across the US declined year-over-year for the 18th consecutive month, albeit by a modest 0.2%. This downward trend suggests that renters are, in some cases, spending a smaller portion of their income on housing compared to previous years. Younger renters, who have been particularly reluctant to enter the buyer’s market, may find some comfort in these trends, though affordability challenges persist in many areas.
Affordability Improvements: A Silver Lining for Buyers and Renters
One of the most significant findings from Realtor.com’s research is that affordability improved in the majority of the 50 largest US cities in 2024. Over 90% of major markets saw a reduction in the share of income spent on rent, and nearly two-thirds of metropolitan areas experienced a decrease in the percentage of income allocated to mortgage payments. This improvement in affordability is a welcome development for both buyers and renters, though it’s important to note that housing costs remain high in many areas. Even in expensive cities like San Francisco and Miami, where affordability is traditionally a challenge, residents are spending a smaller proportion of their income on housing compared to the previous year.
11 Cities Where Affordability is on the Rise
Realtor.com identified 11 cities where the share of income spent on housing decreased by at least 1.5 percentage points in 2024 compared to the previous year. These cities, sorted by median rent from lowest to highest, offer a glimpse into where affordability is improving. While some of these cities are still considered expensive, the reduction in housing costs as a percentage of income is a positive sign for both buyers and renters. It’s worth noting that the 30% rule—spending no more than 30% of income on housing—remains a benchmark, though many households in these cities still exceed this threshold.
Navigating the Market: Advice for Buyers and Renters
For those considering buying or renting in 2024, it’s essential to approach the market with a clear understanding of the current trends. Buyers should carefully evaluate mortgage rates and home prices, while renters should keep an eye on rent trends and lease terms. The improvement in affordability in many cities presents an opportunity for some to enter the market or upgrade their current living situation. However, it’s crucial to assess personal financial circumstances and long-term goals before making a decision.
Conclusion: A Cautiously Optimistic Outlook
While the US housing market remains challenging, the data from Realtor.com offers a cautiously optimistic outlook for 2024. With affordability improving in many major cities, both buyers and renters may find more opportunities to save money or upgrade their living arrangements. However, high costs and limited inventory in some areas continue to pose hurdles. As the market evolves, prospective buyers and renters will need to stay informed and adaptable to make the most of the current conditions.
