With millions of individuals under 40 struggling with student loan debt and rising healthcare costs, even modestly priced real estate can be difficult to afford.

Every U.S. metro area tracked by the National Association of Realtors (NAR) in the third quarter of 2020 saw home prices rise, driven by unprecedented demand, low mortgage rates and depleted nationwide housing inventory.

Scarce housing and low rates have pushed home prices to levels that are making it difficult to save for a down payment, particularly among first-time buyers, who don't have housing equity from a previous sale.

In October, the median listing price for all homes surpassed a milestone record of $350,000, according to the real estate association. Over the same period, median family income nationwide increased just 2.9%. The number of homes for sale nationwide fell 38%. Housing inventory totals were equivalent to 2.7-months at the current sales pace.

With the increased difficulties created by the coronavirus crisis, the housing shortage could become the worst ever in the history of the United States.

Ensuring that homeownership remains within reach for American families requires policymakers to prioritize market stability and access to safe, affordable financing.

There is no “silver bullet” solution. It will require comprehensive strategies at the federal, state and local levels to reduce building costs, boost supply and empower home buyers with a mix of choices.
The public and private sector will likely have to work together.

President-elect Joe Biden has indicated that housing affordability is high on his to-do list, pledging to allocate $640 billion over 10 years to combat housing insecurity, possibly with tax credits for first-time homebuyers, or down payment assistance and special home prices aimed at teachers, first responders and other public service workers.

Some favor easing access to credit by adding rental and utility bill payment histories into credit scores so more minority and moderate-income buyers can qualify for mortgages.

Replenishing the short supply of homes would help decelerate rising costs and improve market affordability. Local leaders are creating programs aimed at incentivizing more affordable units in new projects. In a raging real estate market, it's important to provide a mix of housing products to combat gentrification in the most desirable neighborhoods.

Prominent tech companies - including the Bay Area’s Facebook, Google and Apple, and Seattle’s Microsoft, Amazon and Zillow - have pledged billions toward building affordable housing in the marketplaces where their very presence put upward pressure on prices.

With home prices continuing to rise, families needed roughly $50,819 in annual income to comfortably afford a mortgage on a typical existing single-family home, up from $48,912 in the second quarter and from $49,536 this time last year.

While a family earning just less than $50,000 could afford a home in 125 of the 181 metro areas studied, eight metros required annual earnings of more than $100,000: At this point, it’s coming up with the initial down payment funds that poses the most problems, according to the NAR analysis.

First-time buyers made up 32% of sales in October, up from the 31% in both September 2020 and October 2019, but still lower than historic norms around 40%. Data shows 59% of these buyers received down payment help from family or friends or accessed a down-payment assistance (DPA) program.

With the breadth potential crisis looming, it’s important to pursue multiple solutions to fulfill the vision of safe and affordable housing for all.