AD Mortgage Asks How Middle-Class Homeownership Has Changed

(Image courtesy of Esra Korkmaz/pexels.com)

AD Mortgage, Fort Lauderdale, Fla., released a new report looking into how middle-class access to homeownership has changed from the 1960s to today, finding it has become harder for middle-class households to own homes over time.

Home prices are clearly outpacing middle-class incomes, AD found, expressing a ratio between median home price and median household income. For example, in the late 1960s, the median home price was $22,955, and the median household income was $7,518. That’s a home price-to-income ratio of 3.05.

In comparison, in the early 2020s, the median home price stood at $397,920, and the median household income rose to $75,445. That indicates a price-to-income ratio of 5.27.

The landscape looks generally different–mortgage payments as a percentage of household income have decreased from a half-century ago, but upfront costs have increased significantly.

For example, in the late 1970s, mortgage rates were higher–averaging 9.5%. Monthly payments accounted for roughly 29.14% of a median household’s monthly income. The 1980s saw monthly payments peak, at 35.09%. In the late 2010s, they fell to their lowest, taking up 23.29% of a median household’s income, and now they hover around 27.12%.

In contrast, in the late 1970s, the typical down payment was about 72.1% of a year’s income–in the early 2020s, it hit 105.5% of a year’s income.

In slightly more positive news, housing supply has increased, meaning buyers do have more choice. In the late 1960s there were 0.33 housing units per capita; that now stands at 0.43 units per capita.