More and more Americans are struggling to buy a home these days than in the past century. US home prices are rising much faster than the pay rate, and this is leaving pretty much everybody, especially millennials, in a bit of a crisis.
As house prices are rising, this is making it very difficult for people to stop renting and start paying for their very own home – if they even began renting in the first place. The median price of an existing home in the US hit $244,100 in July 2016, which is up 5.3 percent from the same month in 2015. This is double the 2.6 percent increase that Americans saw in their average hourly pay over the same time period.
Bear in mind that affordability can vary drastically depending on where you’re from in the USA. There are a few places that remain pretty affordable, and of course there are discount realtors to help people save further. However, there is a lack of supply of the lower priced homes that a first time buyer will look at purchasing.
Home ownership has hit record lows in recent years. To afford a typical house in the U.S., a homebuyer needs a minimum salary of $48,603, as well as a 20% down payment to secure the house they want, according to research from mortgage publisher HSH.com. This information was consistent with home purchases across 27 metropolitan areas.
Although many different types of people can’t buy, millennials are one group that are not buying homes in the USA more than ever. They are not even touring open houses or scouring online listings. In many cases, they are not even renting – young men and women ages 18-34 are living with their parents. This arrangement is more common than it has been in 130 years. Some may think that this is down to student loans, but even without student loans the issue of affordability remains.
You must earn to pay the principal, interest, insurance and taxes associated if you plan on buying in the USA. San Francisco sits on top of the list of the most unaffordable cities,
requiring a buyer to be paid at least $142,448 to buy a home. When you look at the average starter home prices and average millennial savings rates, they’d have to save for 28 years before being able to buy their first home. New York City only requires $87,535, however, this is still too much for people.
Some of the more affordable areas out there include Pittsburgh, where you should be able to buy with $31,716. Cleveland is also an option at $32,010, and St. Louis at $33,323; or even Cincinnati, where you’ll need $33,485. These places will give you the most value for money, but you may not necessarily want to move.
It just goes to show that something has to give, or only the privileged will be able to afford their own homes while regular people stay living at home – if they’re lucky enough to have that option.