No One Can Afford To Buy A House
You've probably heard some variation of this question time and time again over the past decade: "Why aren't young people buying houses anymore?" The answer, according to a recent survey, is simple: money.
no one can afford to buy a house
The survey polled 2,529 adults, including 1,397 homeowners, in early March. Among the non-homeowners, nearly two-thirds said affordability was the main reason they hadn't yet purchased a home. Gen Zers largely said their income wasn't high enough yet, while millennials primarily blamed rising home prices.
"Non-homeowners cite insufficient income, high home prices, and not being able to afford a down payment or closing costs as the most common barriers to becoming a homeowner," Bankrate.com's chief financial analyst, Greg McBride, said in a statement. "High, and rising, home prices can contribute to the feelings of not having enough income or savings accumulated to buy a house."
In the Bankrate survey, many younger Americans said they were willing to take some form of action to access a more affordable home: Three-quarters of Gen Zers and 69% of millennials said they'd consider relocating to a different state, moving to a more affordable but less desirable area, or taking a discount on a fixer-upper to achieve their 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.
To be sure, Americans continue to buy homes: The pandemic's rush for property sent the homeownership rate to 65.5% in 2020, an increase of 1.3% from 2019, the National Association of Realtors said on Wednesday. However, those purchasing tend to be wealthier than the typical U.S. household and already own a home, according to Zillow's 2021 housing trend report.
Homebuyers have a median household income of about $90,000, compared with the national median of about $66,000, Zillow found. Given the challenges of the pandemic real-estate market, that means that first-time homebuyers are a shrinking part of the market. First-time buyers represented 37% of all buyers in 2021 compared with 43% in 2020, Zillow said.
"The wealth gap between first-time homebuyers and existing homebuyers may grow even bigger," she said. Middle-income Americans "cannot buy a home because there is so much competition. There is a lack of affordable entry-level homes."
With such obstacles, some first-time homebuyers are resorting to adding roommates so they can pool their assets to purchase a property. Amanda Schneider, a 30-year-old lab technician, joined with two other people to buy a house in Gallatin, Tennessee, for $315,000 in the early days of the pandemic. She said it might have been a stretch to buy a home on her own.
"We feel very fortunate to get the house we did," Schneider told CBS MoneyWatch, noting that the property's value has risen 35% since they bought it in 2020. "It's extremely difficult for other families and groups to purchase a home right now."
Despite the struggle that many are experiencing with home buying, there could be some relief in store later this year, economists say. For one, mortgage rates are rising, which means some would-be buyers may decide they can't afford to purchase a home at the moment.
Before you can look for homes, you have to know how much house you can really afford. And that number should be based on your financial situation, not pressure caused by the rising prices in your housing market.
If you want to buy a home in an expensive market, waiting may be your smartest move. In the meantime, keep saving. Your area may seem more affordable three years from now when you have a hefty down payment saved!
Another option is to revisit your must-have list. A remodeled four-bedroom craftsman home on an acre lot might be out of your price range, so think about what you can change. A three-bedroom home, a half-acre lot or a ranch-style house that needs a little work could be a perfect financial fit.
If approved, the program would significantly improve home affordability in California for the people awarded one of the loans, proponents say. If it had existed in 2021, for instance, it would have reduced the annual income needed to buy a median priced home of $786,000 by more than $30,000 to about $90,000, according to Kate Owens, a principal at HR&A Advisors, Inc., one of the economic consulting firms hired to devise the program.
If you, like me, look at your home as an investment (particularly with no capital gains tax after two years) and not just a place to live, the cheap money now might be worth it on a monthly basis if you love the house that you can afford to buy, but the locked up capital might not pay off in the long term.
Additionally, as mortgage rates rise (which they will), homebuilders get back up to speed (which they already are), and the pandemic continues to wane, more previously reluctant sellers who were unwilling to move during the pandemic will put their houses on the market and inventory levels will increase.
Homes in their best-case scenarios are (or become) direct extensions of ourselves, where and how we want to live, and the communities that we want to create for our children. Since the pandemic began, however, people have been buying houses faster in more unknown places with less information than ever before. That means millions of homebuyers already have bought properties that they never had the proper opportunity to test drive before they decided to upend their lives and move in the first place.
Yes, mortgage rates will rise. But it will take years for rates to approach the 9% range at which I bought my first house before the 2008 crash. So the cheap money likely will be around for a while as well.
Cato researchers found that 87 percent of Americans are concerned about rising home prices. Three-quarters believe average people would not be able to afford a home in their community. Many fear their own children and grandchildren will not be able to purchase a home.
The single-family home remains a dream for most Americans. In the Cato survey, 89 percent of respondents said they would prefer to live in one. Almost no one, it seems, prefers townhouse or condominium living.
The couple said they know competition for affordable homes in Seattle is fierce because of a very tight residential real estate inventory. The couple says they have learned the hard way that timing can be everything.
\"We apply all sorts of the filters on the website and all we end up with maybe is one house,\" Abhijiat said. \"It comes down to one or two houses at any point in time and then bam! They're also gone.\"
According to a report by Mustel Group and Sotheby's International Realty, more than 80 per cent of respondents aged 18 to 28 living in urban centres said they're worried they won't be able to purchase a home in the community of their choice due to rising house prices and half have completely given up on the dream of owning a single-family home. The survey of 1,502 respondents was conducted in the fall of 2021.
The couple is renting a two-bedroom condo in North York for about $2,500 a month. Wang, a product designer, and Skira, who works in IT, said if they were to buy, they could only afford a space half the size of the one they're living in, and they'd probably need to move further away.
Those housing trends are continuing, causing 2023 to be something of a transitional year. Sellers still have an edge in many areas, thanks to continued scarcity of houses, and no one expects a dramatic crash in home prices or values. Still, the frenzied pace has definitely subsided, and many analysts see a shift towards a more balanced market, benefitting buyers.
A final walk-through is an opportunity to view the property before it becomes yours. This is your last chance to view the home, ask questions and address any outstanding issues before the house becomes your responsibility.
Shavon Jones, center right, and her children prepare dinner in their home in Columbia City on Monday, August 15, 2022. Jones was able to buy a five-bedroom house in Columbia City with help from Homestead Community Land Trust and Habitat for Humanity's subsidized homeownership programs. (Amanda Snyder/Crosscut)
The tradeoff in the community land trust model is that if homeowners do choose to sell the house, they must do so at a restricted price to another income-qualified applicant. With Homestead properties, owners earn 1.5% equity on their home purchase price each year they live in it. So if they purchased it for $200,000 and lived in it for 10 years before selling, they could sell it for $232,000. 041b061a72