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Real Estate Bubble Kills American Dream Of Home Ownership For Many

real estate bubble

The current real estate bubble has kept many home buyers out of the market.

Due to the emergence of an ominous real estate bubble, the typical American family no longer makes enough money to pay for the average home.

Property prices are so high that the typical household lacks the income to buy most homes. This fact applies to houses with a 30-year old mortgage in 25 of the 50 states. The website How Much made that conclusion by analyzing data from all 50 states and the District of Columbia.

The average annual household income in the United States was $59,039 in 2016, the U.S. Census Bureau calculated. There are now 25 states where the earnings needed to purchase the average home exceed that amount.

Average Resident Cannot Afford To Buy A Home In Most States

If How Much’s data is correct, the American dream of universal home ownership is dead. Most Americans live in areas where they cannot afford to buy the average home with an ordinary mortgage.

Even worse, there are 31 states where the amount of take-home pay needed to buy the average home exceeded the average income. Another website called SimplePost calculated this surprising information. SimplePost listed the salary required to buy a house in all 50 states.

Some highlights of this list include:

  • There is one state where the income needed to buy a home is double the take-home pay: Hawaii. The income required to purchase the average house in Hawaii is $153,520 a year, but the average Hawaiian makes $74,511 a year.
  • Home ownership is impossible for most Californians. An income of $120,120 a year is required to buy the average home in California. The median take-home pay in the Golden State is $67,739 a year.
  • High property prices are a problem in some low-income states. The median income in Idaho is $54,807 a year, but it would take $70,360 a year to buy the average home in that state.
  • The median household income in Montana is $50,027 a year, but it would take $75,720 to buy the average home in Big Sky Country.
  • There are still many affordable places to live in America. An income of just $38,400 a year is required to buy the average home in Ohio. Only $50,080 a year is needed to buy a typical house in Wisconsin.

It looks as if America is experiencing a new real estate bubble that is making a house beyond the reach of most families. Common sense would indicate that this situation cannot last.

How To Survive America’s New Real Estate Bubble

There are a few smart survival tips for America’s new real estate bubble. The most obvious is to move to a state where the amount of income needed to buy a home is well below the median income.

Such states include Iowa, where it takes just $44,360 a year to buy the average home. Yet, the median household income in the state is $56,247 a year. This difference will give the average Iowa family several thousand more dollars a year in spending money because their mortgage payment will be lower.

Moving to the Heartland or the Midwest is also a great idea. You need to make just $42,560 a year to afford the average home in Indiana. Additionally, you only need $51,520 a year to purchase the typical house in Nebraska.

Staying away from the coasts is a smart move because the highest property values are close to the oceans. A smart move for coastal dwellers might be to rent and invest their extra cash on a house in the heartland. Selling properties in places like California might be the smartest strategy because it would give you a lot of extra money.

Finding a job or business that you can do anywhere is the smartest survival strategy of all. That means you can live in the areas where housing is cheap, and give yourself a lot more spending money.

Waiting for the real estate bubble to end can be a very dumb move. Australia’s real estate bubble has been going on for 18 years, since the beginning of the 21st Century, and there is no end in sight. Americans need to consider the possibility that the real estate bubble could burden the United States for the foreseeable future.

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