(CNN) — Americans looking to buy or rent a home have had a rough year.

Rents are up by double-digit percentages in some cities. Meanwhile, buying a home is the most unaffordable it has been since the mid-1980s. Mortgage rates have surpassed 6% and home prices remain just off the record highs hit in recent months, pricing many prospective homebuyers out of the market.

And while there are some signs of cooling in the market, it doesn’t look like there will be much relief in sight for home buyers.

A year ago, a buyer who put 20% down on a median priced $363,800 single family home and financed the rest with a mortgage rate of 2.88% — the average at the time — had a monthly payment of $1,208.

Today, a homeowner buying the median priced home, which is now $396,300, with a mortgage at the current average of 6.29% would pay $1,960 a month in principal and interest. That’s $752 more every month.

With inflation pushing most household expenses higher, few prospective home buyers can afford those pricier monthly payments.

Over the past five years, the average home price has gone up by 60% while the average income has risen by less than 15%, said Andy Walden, vice president of enterprise research at Black Knight, a mortgage database company.

“Home prices are significantly out of whack with income levels,” said Walden.

Americans are now spending more than 35% of their median income on monthly principal and interest payments for that newly purchased median-priced home. Historically, Americans spent closer to 25% of median income on payments.

To get back to that level, Walden said, some combination of these things would need to happen: a person’s income would need to grow by 40%, mortgage rates would need to be cut in half, or there would need to be a 30% drop in the median price of a house.

But none of those things are likely to happen any time soon.

How did we get here?

Part of the reason housing has become so expensive is that the record low mortgage rates seen during the Covid-19 pandemic increased demand for homes, which in turn pushed prices higher. With multiple buyers competing for a limited pool of homes for sale, bidding wars and all-cash offers became common, driving prices up to record highs.

Now buyers are grappling with a combination of high home prices and rising mortgage rates.

“The pain point came when rates returned to their 6% level,” Walden said.

The other side of the issue is supply. Eager buyers were met with a national shortage of homes that has been a long time in the making, creating a supply and demand mismatch that has pushed home prices higher.

The US has fallen behind by about 5.5 million housing units over the past 20 years as builders failed to keep up with historical building trends, according to the National Association of Realtors. If you add in property destruction due to demolition or natural disasters among other things, the total shortfall could be closer to 6.8 million during that time.

The shortfall of units is so deep that it would take more than a decade to catch up, according to NAR.

But even if more homes and apartments are built, it won’t matter unless people can afford them.

In April 2021, a household had to earn about $80,000 a year to afford payments on the median-priced home with a modest down payment of 3.5%. A year later, the income requirement was $108,000. This cost increase means that about 4 million renter households who could have bought the median priced home last year could no longer do so twelve months later, according to the Joint Center for Housing Studies of Harvard University.

Without a home to buy, renters are staying put, pushing rents up even further in an already-tight market.

Cities in the Sun Belt, like Phoenix and Austin, saw some of the biggest increases in housing costs during the pandemic. In Miami, the price of a home is up 33% from a year ago, and rents are up 17% from last year, according to Realtor.com. But the affordability crisis is happening nationally, in all regions of the country.

As tenants reach the limit of what they can afford to pay each month, homeownership gets further out of reach as they struggle to save for a down payment. This widens the wealth gap and locks in place inequities between those who benefit financially from homeownership and those who don’t. It also widens the racial home ownership gap, in which 72% of White Americans are homeowners while only 43% of Black Americans own a home, according to NAR.

So what happens next?

There are clear signs of cooling in the housing market. Home sales have been dropping for seven months in a row as the rising cost to buy and finance a home pushes more people out of the housing market. Typically, as demand dries up, prices will come down and eventually mortgage rates will settle.

For the time being, however, mortgage rates are likely to rise even more as the Federal Reserve continues to raise interest rates in its battle to fight inflation.

The Fed doesn’t set the rate borrowers pay on mortgages directly. Instead, mortgage rates tend to track the yield on the 10-year US Treasury. As investors anticipate the Fed’s rate hikes, they often sell government bonds, which sends the yield higher and, with it, mortgage rates.

Most housing policy experts say that building a steady supply of new, moderately priced homes is needed to fix the affordability crisis. But because those homes are not as profitable for builders as larger, higher-priced homes, it will take a concerted effort by both public and private sectors.

In May, the Biden administration announced a Housing Supply Action Plan to close the affordability gap and ease housing costs. The plan aims to boost the supply of affordable housing by enhancing existing federal financing and incentivizing areas to reform zoning and land use policies to build more lower cost housing. It also calls for homebuilders to adopt more efficient construction methods.

But none of this is a quick fix, and some of it requires Congressional action.

Separately, the Federal Housing Finance Administration, which oversees mortgage giants Fannie Mae and Freddie Mac, announced plans this summer to expand home financing options for buyers, particularly those of color, to close the racial homeownership gap. These programs include down payment assistance, lower mortgage insurance premiums and a credit reporting system that factors in rent payment history.

Some of these ideas, including new zero down payment loans with no closing costs for buyers in specific Black or Hispanic neighborhoods, are already in place.

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