ALLENTOWN, Pa. — Mortgage rates are skyrocketing, home prices continue to rise, economy-wide inflation is hitting consumers, and housing affordability is weighing on both renters and potential homebuyers.
In Pennsylvania, a battleground state where House elections will determine control of the next U.S. Congress, it’s cheaper to rent or own a home than the national average, but the share of income required to do either is rising, like elsewhere. In 2019, it took 20% of median income to rent a home and 18% to own a home. They are now 22% and 24%, respectively, according to Cotality.
“For people who are trying to get an apartment, move from an apartment to a new home, from a new home to a larger home, each and every one of those groups is reporting that it’s difficult right now, and that’s something that’s weighing on them in a very important political space,” said Christopher Bolick, a political science professor at Lehigh University.
Americans, especially renters, are feeling financially squeezed by housing costs, according to the latest quarterly financial survey released Oct. 5 by CNBC and SurveyMonkey. It found that one in five Americans who rent or take out a mortgage spend at least half of their pre-tax income on housing, and 49% spend between 25% and 49%. Standard guidelines from banks and financial institutions say consumers should spend 28% to 30% of their income on housing.
Allentown, Pennsylvania.
Laura Garrison | CNBC
According to the latest CNBC All-America Economic Survey, housing costs are now the top political issue among U.S. voters ages 18 to 34, ahead of food costs and protecting democracy.
Ahead of the midterm elections, the average interest rate on the popular 30-year fixed mortgage is well above 7.5%, according to Mortgage News Daily. It hit a low of 5.99% just days before the war with Iran began. For buyers of homes with a median price of about $450,000, this means monthly payments will increase by about $300 compared to earlier this year.
House prices have slowed from the strong rises in the first few years of the coronavirus pandemic, but were still up 1.8% year-on-year in August, according to the latest data from Kotality. Home prices have increased nearly 60% since the pandemic began. Combined with rapidly rising mortgage rates, potential buyers are increasingly being turned away. The number of existing home sales in August decreased from the previous year, falling below 4 million at an annualized rate.
“That 4 million number is as low as you can get. It speaks to the extreme affordability problem,” said Norm Miller, a real estate economist and professor emeritus at the Knauss School of Management at the University of San Diego.
The percentage of median income needed to rent or buy a home is increasing nationwide, with homeownership seeing the largest growth. According to Kotality, in 2019, the national average required 24% of median income to rent and 21% to own. Currently, 26% of median income is required to rent and 28% to own. In some markets, especially metropolitan areas on both coasts, that number is significantly higher.
Another report from Apartment List found that 52% of renters nationwide are cost burdened, meaning they spend more than 30% of their income on housing. This percentage jumped dramatically from 2019 to 2022 as rental prices rose sharply during the first years of the pandemic. More than 22 million households in the United States are rent-burdened, a new record.
With 19% of its residents being young, Pennsylvania’s 7th Congressional District, Lehigh Valley, is one of several battleground districts in the state. According to Tufts University’s CIRCLE Youth Election Importance Index, it ranks eighth in the nation among House races where young voters are most likely to influence the midterm elections.
In the district, a household would need $67,481 a year to afford a typical two-bedroom rental without spending more than 30% of their income on housing. The equivalent “housing wage” is $32.44 an hour, according to the latest National Low Income Housing Coalition Congressional District Summary.
“We’re seeing a shift in the landscape of home prices and access to the rental market that really taps into some of the other broader concerns we’ve seen in the affordability space in a very powerful way,” Bolick said. “So when you talk to voters and residents in the area and ask them about what is causing their concerns right now, housing is always near the top of the list.”
Jessica Heller, 33, is a newlywed. She and her husband rent from a friend in Allentown at a discounted rate. Even with a six-figure salary, she says she doesn’t expect to own a home in the near future.
“Unless I put $50,000 down, but where’s the money going to come from? The mortgage is going to be about $2,3,4,000 a month,” Heller said. “And in Allentown, some of the most run-down homes are still selling for $400,000. We just can’t seem to get something like a starter home and invest in it.”
Most renters want to own a home, but few expect it, and nearly three in four Americans say it has become more difficult to buy a home in the past five years, according to research from CNBC and SurveyMonkey. The results also revealed that nearly one in four renters have no plans to buy a home, with down payments and limited income being the biggest barriers.
Incumbent Republican Congressman Ryan McKenzie is running against Democrat Bob Brooks. McKenzie has touted his support for the affordable housing tax credit passed in the 2025 budget. In January, he co-sponsored the Making America’s Homes Affordable Act, which created a primary residence tax credit for homebuyers. This bill has not yet been voted on.
“Housing affordability is one of the biggest concerns for families across the Lehigh Valley and Poconos. After enduring years of rising housing costs, first-time homebuyers deserve relief,” McKenzie said in a release.
Allentown, Pennsylvania Real Estate.
Laura Garrison | CNBC
Brooks has also made housing affordability a top priority.
“We need to build more starter homes, crack down on corporate landlords and rent gouging, and expand programs that help first-time homebuyers get off to a good start. And we need to eliminate the rules and bureaucracy that sometimes make it harder and more expensive to build a home,” he said on his website.
According to the U.S. Census, 54% of renters in their district spend more than 30% of their income on rent. According to Zillow, home prices in Allentown are up nearly 4% from a year ago. Rent and home prices have increased significantly, especially in Allentown, as former residents of New York City and Philadelphia ironically moved in search of more affordable housing.
“When you look at a market like the Allentown metro, it takes almost 60 percent of the average renter’s household income to even consider ownership for the median home in that particular market, which is slightly above the national average,” Miller said.
Blake Fontaine, 26, still lives with his mother at home in Easton. Fontaine said he earns a six-figure salary at ADP, one of the area’s major employers. He said he wanted to move now that he had saved money, but he couldn’t bear the expense.
“When I started looking at home prices, I completely fell behind,” said Fontaine, who said he would not vote in the upcoming election. “It’s like I’m paying $500,000 for the same thing that my mom paid $100,000 for. It makes no sense.”
In another battleground district, Pennsylvania’s 10th District, Republican incumbent Scott Perry is running against Democrat Janelle Stelson. Perry was the only Pennsylvania lawmaker to vote against the 21st Century Road to Housing Act, a bipartisan affordable housing bill that was signed into law in July.
“For over 50 years, the federal government has been pumping money into housing, which created the current housing crisis,” Perry said in a social media post. “The more money you throw at it, the more the price goes up.”
Rival Stelson has a housing affordability plan that includes expanding small mortgage loans and cutting home-building regulations.
“I will vote to eliminate the tariffs on lumber and drywall that (Pennsylvania) Congressman Scott Perry supports that drive up the cost of every home we build,” Stelson said at a campaign event in front of a new apartment complex in Carlisle, Pennsylvania.
Pennsylvania has a huge number of municipalities, which adds to the growing number of local zoning complaints from builders across the country, and what Lehigh University’s Bolick calls a vast number of municipal regulations.
“We don’t necessarily know if there will be any changes in the short term or near term that will really impact consumer sentiment in this particular affordability space,” he said.
