How to Navigate the Housing Affordability Crisis

Housing affordability is a huge problem for many people, and it can’t be solved with a quick tip or a magic-bullet answer.

According to Redfin research, just 21% of listed homes in the U.S. are affordable for the average household—“affordable” meaning that the monthly mortgage payment would consume 30% or less of the average person’s monthly income. In fact, the average American would have to spend 42.9% of their income to afford just a median-priced home.

Renters aren’t fairing better, with average rent prices up 18% in the last 5 years—outpacing inflation and placing a heavier financial burden on those who already tend to fall on the lower end of the economic scale. Affordable housing programs exist, but most are overloaded and many have waitlists that are over a decade long.

Many factors play into how expensive it is to get housing, whether you’re renting or trying to buy your own home. The economy, mortgage rates, a physical housing shortage, and the fact that salaries have not kept pace with the rising cost of housing, even if you account for inflation, all play a role. Making housing more affordable across the board would require big, systemic changes. But while you’re working with what we’ve got right now, here are some tips for navigating housing unaffordability.

If rental prices in your area are very high, you may find that you’d have a lower monthly payment if you had a mortgage instead.

Stuck on that downpayment? It may be easier to qualify than you think—especially if you’re a first-time homebuyer. Some programs offer loans that require a downpayment as low as 3.5% for first-time buyers, and if you’re in a rural area, check out the 0% down USDA loan. Also don’t forget to look into first-time homebuyer programs in your state, county, and city. Many offer grants or forgivable loans to assist first-time buyers with making their downpayments.

When mortgage rates went up, buying a home became less affordable for anyone who needed a mortgage to do it. However, getting a lower rate can be a simple as finding the right loan program that works best for you

It’s important to find a knowledgeable lender to show you the different options that match your unique situation. Don’t forget to look into unconventional loan types too, such as the FHA loan or the USDA loan for lower rates and/or lower down payment requirements. Your mortgage professional should be able to guide you through different ways to lower your rate or monthly mortgage payments.

If you’ve been looking for a fully-renovated, turn-key home, you’re likely seeing some of the highest prices your market has to offer. Instead, try checking out homes that need updating. This is important—you’re not looking for a money pit with lots of issues. But if you find a home that is structurally sound but has dated or less-than-perfect aesthetics, you’ll likely have the opportunity to buy a good house at a lower price. Another benefit? You’ll be able to make this place truly your own when you update it to your taste later.

This can be as dramatic a change as relocating to a different state or as simple as checking out the neighborhood a few blocks over.

If the cost of living in your city is very high, and you don’t have a lot keeping you there, it could be time to consider a move. This tactic is especially popular with people who work from home and can take their employment with them. Look for cities with a lower cost of housing that also meet your needs in other ways, such as the accessibility of your favorite hobbies, social activities, and lifestyle factors like walkability.

If you want to stay in your current city, try broadening the scope of your search (especially if it’s been narrow). Sometimes looking for a home just a few minutes outside a very popular location can result in significantly lower rental prices, while the convenience isn’t markedly different.

Real estate agents are experts in their local real estate markets, and that means they can help you find what you’re looking for—even when it seems impossible. Look for someone with significant experience in your location and within your budget. Where do you find that info? Check out their website, their reviews, and give them a call. Someone who specializes in luxury real estate probably won’t be the best bet—but someone who frequently buys and sells real estate in your budget will have a great network they can tap into the find you the home you need.

Having trouble finding the perfect home inside your budget? Get in touch with an expert member of our team today. We can’t wait to help. Fill out the form below to get started.