Buying a home is a huge step in life. It’s what most people say defines success (watch this video). It’s probably the most money you’ll ever spend at one time, and it’s a huge accomplishment. This is why for the longest time home ownership has been called “The American Dream.” But is it becoming unaffordable?
According to a new study by Zillow, Americans are now spending 28% of their income on their mortgages. Most financial advisors, when they’re giving you a budget breakdown, say that spending 30% on housing is the max amount you should spend. So if you have a monthly income of $6000 (more than the median income in USA in 2021, which was $67,521), you should only spend $2000 on housing.
The numbers tell us that’s not happening, though. The average mortgage on houses bought in June of 2022 is $2,127. The other problem is that everything else is going up in price as well. Gas prices, groceries, and pretty much everything else has gone up in price, leaving less money for Americans to spend on housing.
So, is housing becoming unaffordable? It’s less affordable than it was, but there still is hope as we see some slowing in the market. The prices of homes for sale are going down, and we’re not seeing as much of a buyer frenzy as before. So, if you’re still in the market for a house, there is hope for you.