It’s Either the Affordable Home or Unaffordable Lifestyle, Pick One!
The American dream is dead and unaffordable.
Home prices are up in the US. Fueled by once-low interest rates and available cash, prices skyrocketed as much as 30% in the two years since the start of the pandemic. As inflation pushes all-time highs, the Feds are increasing interest rates in as little as 24 increments through 2024.
But what does this means for you?
Hopefully, this slows down price hikes but it’s unlikely that the old price is ever coming back. The Federal Reserve has no intention of slowing down rate hikes nor those it envision a reversal anytime soon. The best bet now is to review your cash flow management, tweak the budget and scale back prior to the global recession. It’s going to be a rough one.
All leads to one question. Do we want affordable housing or are we addicted to unaffordable lifestyles?
Table of Contents
Unaffordable to Whom?
In this episode of the Financial Griot podcast, the hosts will discuss changes in the market and how the pursuit of the unaffordable impacted society for the worst.
- The homeownership rate in the United States amounted to 65.5 percent in 2021.
- The young adult homeownership rate dropped 10% between 1960 and 2017, reflecting a shift toward renting.
- The average home is valued at over $400,000 with interest as high as 7.50% on average.
So can I buy it or not?
The homeownership rate is the proportion of occupied households which are occupied by the owners. This reached its peak in 2004 before the 2007-2009 recession hit and decimated the housing market. With society changing, we will likely settle at 60 percent by the end of the decade.
According to a new National Association of Realtors® survey of about 9,400 Realtors, international buyers snapped up 98,600 residential properties totaling $59 billion.
While, retail investors bought nearly a quarter of U.S. single-family homes that sold last year, driving up rents for suburban families in the process.
Across most states, investor purchases of homes spiked in 2021.
Specifically, investors made 29% or more of the home purchases in Arizona, California, Georgia, Texas, and Nevada. Investor purchases doubled or more from 2020 for Florida, Nevada, Vermont, and Washington. See CoreLogic and Stateline analysis
Shifting our dollars to compete in an unaffordable period
One thing we are not going to do is buy a home sight unseen, with no inspection, and overpriced. 2020-2022 saw a fevered pitch in home sales with record low-interest rates. People went overboard. And now, many are complaining that they are house poor.
With rent rising, Christen Riggins had 30 days to move after her landlord’s management company told her they were selling the home she was renting with her three children. She pushed to get into a home for more than asking.
Riggins’s monthly rent went from $800 a month; to a mortgage payment of $1,500. The house needs repairs that her inspector did not catch. None of the kitchen appliances worked. There are electrical issues. The roof needed to be fixed. She found mold under the cabinets. “I feel like I was really screwed over and put in a really bad space,” she said.
People are buying more “home” while depleting their savings. This is likely struggling backward. And, please stop listening to bad social media advice.
So Why Did We Bring This Up
The Financial Griot is a play on two words (Finance + Griot) that hold significance in closing the wealth gap while embracing our differences.
We tell the stories that others don’t. Stories about growth, opportunity, and embracing changes. Beyond that, we talk about Finances. Specifically, how to become Financially literate, incorporate actionable steps, and ultimately build generational wealth.
The struggle doesn’t have to be perpetual. There are ways to improve your cash flow and turn unaffordable into something that works.
We get there by having a fresh take on what we need. Additionally, we get there by shifting our consumer and geographic needs. Why do we know this works? Because we’ve done it. As young millennials, it’s often hard to conceive ownership. However, it’s possible and mandatory.
A $400,000 home in 2022 can end up costing you $836,280 in the long run but it’s still 100% better than renting.
Connect with TFG Crew aka the Hosts:
- Alainta Alcin – Blogger, Travel and Money Enthusiast @alainta_alcin
- Lovely Merdelus – Entrepreneur and Small Business Growth Specialist @lovelymerdelus
- Lawrence Delva-Gonzalez – Federal Auditor, Blogger, and Tax Specialist @theneighborhoodfinanceguy
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