Because of increasing home prices, home buyers are finding creative solutions to benefit from their limited means and to live the American dream.
Changes in the housing market are inevitable, and buyers are getting innovative in ensuring they can live the American dream despite the high property prices.
The income needed to buy a house has increased by an astounding 80% since January 2020. A typical home in the U.S. now requires a monthly mortgage payment of $2,188, assuming a 10% down payment, nearly double what it was two years ago. Home prices increased by 42.4%, and a home's average price is now about $343,000. At the same time, mortgage rates have risen to about 6.6% from 3.5% at the start of 2020.
A typical American home could comfortably be bought by a family earning $59,000 annually in 2020. However, the current income required to pay off a mortgage is around $106,500, more than twice the projected median household income of $81,000. Wages were not keeping pace with the increasing cost of housing, which led to a substantial gap in affordability.
Here are some unusual ideas for owning a house, during these challenging and unforgiving times.
To pool resources, buyers increasingly partner with friends and family. Cobuying allows them to share the financial burden and qualify for larger mortgages. Additionally, some buyers are "house hacking" by renting out part of their homes to generate extra income. This approach helps offset mortgage costs and makes homeownership more attainable.
Buyers are exploring fewer competitive markets as the price of big cities is falling. Long-distance movers are targeting cities with lower housing costs. Buyers can attain their goal of home ownership by relocating to areas with more reasonable prices, and they do not have to stretch their budget.
Some of the more affordable housing markets in the various parts of the U.S.
· Pittsburgh: A buyer needs an income of $58,232 to afford a home.
· Memphis: Requires an income of $69,976.
· Cleveland: The income required is $70,810.
· New Orleans: Requires an income of $74,048.
· Birmingham: The income required is $74,338.
· San Jose: Buyers need an income of $454,296.
· San Francisco: Requires $339,864.
· Los Angeles: The income needed is $279,250.
· San Diego: Requires $273,613.
· Seattle, New York City, and Boston also have high-income requirements.
Remember, owning a home may be steep, but determination and strategic thinking can help turn that dream into reality. Smart financial decisions, timely savings, and a good income are critical.
