Housing Affordability Plummets!
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I want to talk a little bit, I want to talk a little real estate reality right here. You got housing affordability in the United States, declined again. Home prices surged around the country. Price of a median single family house surged to 350,000 in the second quarter. It’s a 10% jump from the previous quarter and one of the biggest increases over the past decade. It’s 2% above last year’s peak. The portion,
This is one I really wanna get into. The portion of average wages required to own a home skyrocketed to 33% in the period from April to June. That’s the highest debt to income ratio since 2007. So this is the market is the, as least affordable for Americans in almost, well, a little under two decades. All right, first and foremost, do I think that this is,
somewhat seasonal. Yes, I do. I do think it’s somewhat seasonal. And again, mortgage rates stay where they are. Again, high sixes into sevens, you’re most certainly going to see those numbers start to come down. It’s just the reality. It’s just kind of how the world works. This debt to income ratio is what concerns me.
I try to explain to people all the time. You do not want to be house poor. You don’t wanna be house poor. You’re constantly worried about that bill every single month because you gotta make that bill. It’s no way to go through life. You want to be able to enjoy your time here. You want to be able to enjoy your life. Of course you wanna have a wonderful home. You wanna enjoy that too.
but you don’t wanna get yourself into a situation where you’re overextending yourself. And oftentimes I encourage people to wait. To wait, I know, your conventional wisdom, you’re gonna get those real estate agents out there, ah, it’s gonna keep going up, value’s gonna keep going up, can never go down, it’s always a great investment. Hold your horses. There’s a lot of costs involved with owning a home as.
Many listeners, homeowners know this, they understand this, all of the things that are involved with it. So again, you gotta be really, really careful when you’re making this decision. And you do not want to overextend yourself. You don’t wanna overextend yourself in anything that you do. But this is a major commitment that you’re getting yourself into. And I see, gee whiz, 30.
3%? It’s a lot. It’s a lot. And people, there’s nothing wrong with renting until you find something that suits you. And it’s something that you can afford at that point in time. The stress that goes along with owning something that you know, you have to stretch yourself every single month to make that bill, it’s just not worth it. It’s not. And I’ve written column after column about
and people talking themselves into all sorts of, you know, I gotta put a new kitchen in, I gotta do this, but I’m gonna get my money back. Listen, okay? If you’re not paying cash for your house, not paying for it in full, and let’s say you take out a 30 year fixed mortgage, and let’s say you stay there for the entire time, the entire 30 years you’re there, and you decide to move at the very end.
a pretty darn good chance that you’re going to sell your home. Okay. I’d say there’s a 90% plus chance that you’re going to sell your home for more than you bought it for. And in some cases, maybe a hell of a lot more than what you bought it for. But you also have to consider people. Okay. How much interest did you pay over the years? How much did you just spend on upkeep?
and landscaping and all of the things that go along with it. Nothing wrong with that, okay? But you have to try to not think of your home as an investment vehicle. And if you do, it’s gonna be a low performing asset, okay? People get all excited, you know, oh wow, look what I sold my house for, how much more than I bought it for, and they fail to realize all of the costs that were involved. Again, okay?
Gotta live somewhere. We all have to live somewhere. Need shelter. Not gonna hang from a tree like a bat. Okay, I get that. Get that. But again, you need to put it into proper perspective and don’t let those real estate agents tell you otherwise. It’s always a great investment. Not always. Anyway, Watchdog on wallstreet.com.
