Important points
- Home purchases became less affordable in the third quarter of 2023, in line with the two-year trend, according to real estate data provider ATTOM’s third quarter home price report.
- The average American wage earner can’t afford to buy a home because mortgage rates and home prices remain high, a report finds.
- Multifamily housing and robo-advisors can be a solution for those looking for creative ways to meet their home purchase savings goals.
Buying a home is becoming increasingly out of reach for people on average incomes, forcing many to abandon purchase plans while others take unexpected paths to ownership. Some people may do it.
Buying a home will be even less likely for many people in 2023, according to real estate data provider ATTOM’s recently released Q3 Home Price Report. According to ATTOM, more than 99% of the counties analyzed were found to be more affordable than the historical average price.
The county analysis’s numbers are part of a two-year pattern that has made homeownership more unaffordable for average American wage earners. This was an increase of 1 point from the previous quarter and 3.8 points from the same period last year.
Lack of financial means means people have to get creative when buying a home, so one possible avenue is multifamily housing. “Customers may consider purchasing a duplex or fourplex as a way to supplement their remaining mortgage payments,” Kassi M. Fetters, a financial planner with Altica Financial Services, told Investopedia. Told.
Think of it like this: If you buy an apartment complex and rent out part of the home, the rent you earn can be used to pay part of the mortgage, as opposed to you paying the full cost of the mortgage payment. Basically, I bought a single-family home with the same loan amount.
Robo-advisors could be another unexpected avenue for people to save for a home. Robo-advisors are digital platforms that provide automated, algorithm-driven planning and investment services. Investopedia’s 2023 Robo-Advisor Consumer Survey found that nearly half (49.8%) of people who use robo-advisors to invest do so for the purpose of buying a home.
This is surprising given that robo-advisors have typically been associated with long-term savings goals, such as saving for retirement or college. However, that doesn’t mean it’s not effective at setting aside funds for medium-term goals, such as a down payment.
For many people, buying a home is the biggest financial decision of their life. “Purchasing a home is more of a personal decision than a financial one,” said Spencer List, a financial planner at Paradigm Advisors. “Remember, it’s okay to delay buying a home to get your finances back on track and find the right home for your family.”
ATTOM’s report analyzed homeowner monthly spending and average income data from the Bureau of Labor Statistics. The current figure was compared to the 28% debt-to-income ratio commonly used in mortgage lending.
Konstantin Tsantes, an investment advisor at Cetera, says the best situation to buy a home is “someone with a $200,000 down payment and a significant household income,” but that’s far from reality for most Americans. he said.
