For most Americans, owning a home is now a distant dream

Home prices across the U.S. are surging, while a shortage of houses for sale has resulted in cut-throat competition for those in the market to buy a property. That confluence of trends has taken the dream of homeownership well beyond the means of middle-class Americans, who are increasingly up against higher-income buyers for a smaller pool of homes.

Nationwide, there are only about 250,000 homes currently for sale that are considered affordable for households with between $75,000 and $100,000 in annual income — a sharp decline from the roughly 656,000 available homes prior to the COVID-19 pandemic, a recent analysis by the National Association of Realtors (NAR) found.

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This means there are now about 65 households in that income bracket for one listing, up from 24 households in 2019.

In many cases, it's also no longer enough for a prospective buyer to come prepared with a downpayment and a pre-approved mortgage. About 30% of homes were bought with all-cash offers in 2021, up from about 25% in 2020, according to real estate firm Redfin. In some cities, such as West Palm Beach and Naples, Florida, more than 50% of purchases were all-cash deals. Sellers are demanding that buyers forego contingencies, including for financing and inspections.

Zillow projects home prices will increase 11% in 2022

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Another sign of the times: The U.S. now has almost 500 cities where the average cost of a home has hit $1 million, according to Zillow.

"Unfortunately, the middle-class dream of homeownership has been fading away," Redfin chief economist Daryl Fairweather told CBS MoneyWatch. Owning a home in the U.S., she said, "is a signifier of the upper class now."

New housing data out Monday underlines just how sharply home prices are rising. According to the S&P Case-Shiller Index, a widely followed gauge of the housing market, home prices shot up nearly 19% last year, up from a gain of roughly 10% in 2020. That's the steepest one-year increase in the index in more than three decades.

"Home prices remain excessively high and are impacting affordability," Rubeela Farooqi, chief U.S. economist with High Frequency Economics, said in a report.

Welcome to year three of the pandemic real estate market, which experts described to CBS MoneyWatch as "deeply stressful" and "ultra-competitive." That comes after a heated property market in 2021, when the median sale price of existing homes rose about 16% to almost $360,000, according to NAR.

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For most Americans, owning a home is now a distant dream

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