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follow Patrick 2018 May 8, 8:04pm
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What do these income trends mean for housing?More rental demand and downward pressure on homeownership. With 35% of working-age households earning less than 2/3 of the US median income, compared to 31% in 1970, a lower percentage of households are able to qualify to purchase a home, and thus more will rent.More demand for lower-priced homes.The lowest-priced homes in the market have even more demand. In most markets, the months of supply and days on market of the lowest-priced homes are extremely low.Less demand for median-priced homes.The shrinking middle class (down 12% in share of households and 22% in share of aggregate income) creates less demand in the middle of the market.More high-end home demand.With a larger share of households having more than double the median income and a rising share who are buying later in life due to delays in marriage and having children, a rising percentage of households are buying a more expensive than usual first-time home. In our experience, this isn't showing up in the very highest price points, but rather for homes priced up to 50% higher than the median home price in a market. Home builders in particular have benefitted from this demand, selling higher-density new homes in great locations to first-time buyers.
The shrinking middle class is having a huge impact on housing