Despite signs of housing market normalization on the horizon, many consumers still feel constrained by affordability challenges. Consumers report that lower incomes, higher mortgage rates and a lack of supply in the market remain their biggest hurdles to affording a home, according to Bright MLS’s latest consumer survey.
The MLS’s latest survey of 3,000 Americans found that 55.5% of respondents felt people do not earn enough income in order to purchase a home, and 50.1% felt mortgage rates were still too high. In relation to income, 40.8% of respondents said that other housing costs—property taxes, homeowner’s insurance—were too high. In addition, 43.2% of respondents said not enough housing was being built at lower price points.
“Consumers are very clear about what they see as the core of the affordability problem,” said Bright MLS Chief Economist Lisa Sturtevant. “From their perspective, incomes haven’t kept up and higher mortgage rates have further reduced purchasing power.”
All age groups (under 40, 40-59 and 60-plus) agreed on insufficient income as a major barrier. Those under 40 also pointed to housing not being built where people want to live as an issue, and those 60-plus also pointed to the lack of newly constructed lower-priced homes as an issue.
According to Sturtevant, recent housing market trends help explain these perceptions. Over the past several years, home prices have increased faster than household incomes, while mortgage rates rose sharply from pandemic-era lows, significantly reducing affordability for prospective buyers.
“In the near term, consumers’ views align closely with what we see in the data,” she said. “Incomes growing more slowly than home prices and higher mortgage rates have had an obvious impact on affordability. Longer-term, however, it is clear that a lack of new residential construction has also put upward pressure on housing costs.”
The survey also noted that housing affordability has been “garnering unprecedented attention at the federal level,” with many policies and plans being put in place as of late to assist the housing market’s normalization. Of note is the order from President Trump to restrict institutional investors from purchasing single-family homes, which 32.3% of Bright’s survey respondents felt has been a barrier to affordable housing, and 71.8% said a restriction could help improve affordability.
In terms of what else can be done, 84.8% of respondents felt providing tax credits or other financial incentives for first-time homebuyers could be a demand-side solution, while 84.1% felt providing incentives to developers to build lower-cost homes or starter homes could be a supply-side solution.
