Middle-class families can only afford HALF of what they could have bought in 2020

• The median purchasing power for families has dropped to $356,273 as of August
• This comes despite home prices rocketing to a high of $737,392 in winter 2020

Middle-class families can only afford homes worth half as much as they could three years ago, new data shows.

The median purchasing power for families has plummeted to $356,273 as of August, down from $689,091 in summer 2020.

This is despite it rocketing to a high of $737,392 in December 2020, figures from government-backed lender Fannie Mae reveal.

It comes despite a recent report of a widespread housing shortage across the country. 

However, as purchasing power has gone down, list prices have only increased, with a new high this past August of $446,924.

The numbers, according to NBC News, show a nightmare for Americans attempting to invest in real estate. 

‘If you don’t make six figures, it’s going to be really tough’ said Lawrence Yun, chief economist for the National Association of Realtors. 

Perhaps because of the need for real estate, four million homes are still being sold every month, despite the rising mortgage rates.

The solution for buyers is borrowing a lot more money than they did even just a few years ago to purchase a home. 

In spite of these challenges, people are still buying homes. About 4 million are sold every month. But to a shocking extent, rising mortgage rates and the shortage of homes for sale — which feeds rising prices and bidding wars — has weakened their financial position.

People today are borrowing significantly more money for homes at much higher interest rates than just a few years ago. Overall, a homebuyer’s dollar goes about half as far as it did at the end of 2020.

Mortgage rates were down to 2.68 percent for a 30-year fixed mortgage in December 2020, but as of this past month, the numbers are up to a shocking 7.63 percent, according to Fannie Mae. 

The average mortgage payment on a newly purchased home is over $2,000 a month now, when it was only $1,100 three years ago. 

Rocketing rates mean homeowners who are locked into cheap mortgages are refraining from selling.

This, in turn, is pushing up property prices – meaning buyers are facing the least affordable market since 2006.

Pending home sales are down 13 percent from a year ago, according to real estate company Redfin, and the total number of home sales is down 16 percent year-on-year to September.

And the housing shortage is most acute in price points that middle-income buyers can afford, according to the National Association of Realtors. 

Joel Efosa, CEO of home buyers Fire Cash Buyers, owns several properties – including ones in Dallas, Texas, and Orlando, Florida.

‘Recently, I’ve noticed a significant uptick in the number of solicitations from realtors wanting to purchase these homes,’ he told DailyMail.com. 

‘I receive weekly mailings, and sometimes even phone calls, urging me to consider selling due to the high demand and skyrocketing property values.’

His property in Dallas, which he purchased a couple of years ago for $200,000, is now being appraised at nearly double that amount, he said.

‘It’s clear that the housing shortage is creating a sellers market – and realtors are eager to capitalize on it,’ he added. 

It comes as analysis by Bank of America (BofA) identified Dallas, alongside San Antonio and Houston, as being among the four cities facing the worst property shortages in the US.

The list was rounded out by Orlando, Florida, which is also experiencing high population growth and low housing stock. 

According to BofA, the areas with the biggest housing constraints were due to their buoyant labor markets which are causing their populations to spike.

For example, in Dallas, the number of people on its nonfarm payroll has risen by 14 percent since January 2019. In Orlando, this figure has increased by 10 percent.

Nationally, nonfarm payrolls have risen by just 4 percent comparatively.

Widespread shortages in the ‘hot’ areas have caused house prices to shoot up, with Orlando seeing its home values increase by 58 percent in June 2023, compared to 2019.

Similarly in Dallas, homes had appreciated by 29 percent in value. But researchers said the property market in San Antonio was starting to ‘soften’ despite the shortages.

However there are still some parts of the US which are less impacted by shortages. 

On the opposite end of the spectrum, St. Louis, Detroit and Miami were revealed to have the highest housing stock relative to their populations.