According to property market analysts, a lack of affordable homes in the U.S. is going to continue over the next few years. They expect prices to go up faster than wage growth and inflation.

House Prices Going Up

Houses in the U.S. lost over a third of their value ten years ago. This led to a deep recession and a financial crisis. Now, the housing prices in the U.S. have recovered from those loses. This is thanks to the strong economy and low unemployment rate.

In fact, the demand for houses is now so high that supply hasn’t been able to keep up with it. This makes homeownership a lot less affordable.

Average annual earnings growth is still below 3%. On the other side, house prices are rising more than 5% per year. Almost 45 researchers were taking samples between May 16 and June 5. The research is that showing home prices in 20 cities are probably going to increase by 5.7% this year. Earnings growth, however, will only be 2.8% in 2018.

Experts expect house prices in the U.S. to rise 4.3% next year and 3.6% in 2020.

Not Anything New

A senior economist at BMO Financial Group, Sal Guatieri, stated that they don’t see anything new here. He said that the house prices have been higher than family incomes for a couple of years in the U.S. He also added that the supply is still not large enough, but that demand is not as high as it used to be. He expects that the house prices will be higher than family incomes for at least a year.

Another potential problem for people who want to buy homes is mortgage rates that are on the rise. A recent poll shows that the average mortgage of 30 years is going to rise 4.6% this year, and then 5% by the end of 2019.

Questions from the American People:

1. How can current homeowners benefit from rising house prices? When is the best time to sell?
2. With higher demand for homeownership and a lower supply, will more Americans opt for condo living?
3. If this trend continues, how could it change the physical landscape of America?