One in 4 middle-income new homeowners — twice as many as a decade before — are buying into cost-burdened situations.
The share of middle-class Americans who are buying wallet-squeezing homes has more than doubled in the previous 10 years.
Almost 30% of middle-class homeowners bought homes with monthly payments costing more than 30% of their income in 2022, an NBC News analysis of Census Bureau data found. That’s more than twice the share from 2013, with experts warning it leaves many households with less money for groceries and emergencies and less able to get ahead in the future.
That “cost-burdened” benchmark — in which a household devotes over 30% of income to housing costs — is a widely used measure of affordability for both homeownership and renting. The Census Bureau measures housing costs against it, and the Department of Housing and Urban Development has used it for decades.
When buying our first house in 2008 the mortgage company was pushing us to buy more by saying, “why are you purchasing this house at $197,000 when you can afford twice that?” My response was, “we’ve done the math, we can’t afford twice as much.” Never listen to a mortgage broker. They all want you to spend more so they make more.
I bought in 2022 and can’t imagine having that much interaction with a mortgage broker. My interaction consisted of giving them my information. Getting pre approved for a stupidly large mortgage (about twice what I could afford). Then, when I found a place to buy, they punched in the address for the “virtual appraisal” and approved the loan.
I had the exact same experience a few years ago. A lender did some quick math within like 20 minutes of talking and was like “I think we could go ahead and lock you in at loan in the mid 600’s”
Lmao we could never in a million years dream of affording that. Idk wtf that dude was thinking but I can’t even begin to try and figure out how I’d be able to afford that mortgage unless it was like a 3,000 year 1.08% loan or something.
The amount I “qualified for” when applying for a mortgage was fucking insane. I would be completely under water if I had taken the bank up on that full amount. I assume plenty of people jump at the chance to spend huge piles of money they don’t have and will likely never have.
Alternative headline: “Homes buyers can comfortably afford increasingly rare.”
Seriously, what a fucking disgusting headline… It reads as if the people are being irresponsible and buying things larger than they should…
Way to blame the people for an issue that isn’t their fault…
Well, the thing is, this is exactly what led to the housing crash of '08. Back then it was because the banks were pushing people into it (and then selling the bundled loans as better rated than they were, where inside investors bet on the loans failing). If this is what’s happening now, it’s certainly because the banks are enabling it again. That would be insanely stupid of the banks after what happened in '08, but somehow we’ve gotten stuck in the stupidest timeline, so…
That would be insanely stupid of the banks after what happened in '08,
Would it be though? Leeman fell, but then we started with the “too big to fail” bullshit and gave a nice lesson to the bankers that we’ll be here to bail them out should their greed take them too far. Only Joe schmoe should suffer the consequences of their actions, not the ownership class naturally. :/
Well, yeah. We can’t afford rent either.
Should we suffer from rent we can’t afford or a house that might one day have some value?
Because renting a home that’s barely enough to get by is even more expensive and will go up faster than inflation, so if you’re lucky you buy a house that’s barely enough to get by and wait for the day when it’s finally affordable since the payments don’t increase as much as inflation.
Yeah but repairs don’t get taken care of by a landlord. When you buy a home, you have even less monthly funds available for mortgage because you also need to be saving a little for the big repair things that come up.
Renting allows those repair expenses to be handled by the landlord rather than the tenant. Renting is not inherently a worse decision than buying, there are pros and cons to both.
I own a small house that is 118 years old with plenty of issues, and the amount I put into repairs and maintenance is nowhere near the difference in what it would cost to rent a similar sized home in my neighborhood compared to my mortgage, taxes, and insurance. That includes a major sewage issue that required digging up and replacing the old clay pipes, something I couldn’t do myself.
And I’ve only owned it for 3 years, so I haven’t even gotten to a point where inflation has increased rent over the mortgage payments yet, mosly because the rental market is insane in most cities due to short-term rentals and offshore investors leaving lots of properties off the market, so landlords can charge way higher rents with so little competition. In 10 years, assuming there’s not a market crash, I’ll be way better off.
Renting only saves repair cost in the short term, spreading out those costs across time, because otherwise there wouldn’t be profit in renting. As a renter, you’re never in a position to do that saving because rent is always so much higher than mortgage cost. Even if you have to pay more for the home than the asking price like I did. I just happened to get in before the interest rate hikes is all that I benefited from.
Every home I can afford is a home I can barely afford, for both rent and mortgage.
