When I first moved into the community where I live it cost me roughly $6,000 out of pocket. My monthly mortgage payment including property taxes, insurance, and PMI was $1,650 each month. I moved into a brand new 2,150 square foot home on a cul-de-sac with a pond view, 3 bed/2 bath plus an office, gas log fireplace and a second living room. I was 21 years old.
I sold that home 9 years later and made $74,000 in profit (even going through the housing collapse and Great Recession). That same home is now 15 years old and costs roughly $225,000 more than I paid for it when it was new. The windows have lost their thermal seals, the roof probably needs replaced, the hot water heater definitely needs replaced, and the HVAC system is likely on its final days.
In order to buy that home today a buyer would need roughly $30,000 in cash to put down at minimum (if they could get a seller to actually accept that offer). The monthly mortgage payment would be about $2,950.
It costs $15,600 more each year to a homebuyer today than it cost me to buy it 15 years ago. Incomes are relatively flat over that same time period.
Here’s the reality. If you have lived in the same home for 10+ years right now, you likely couldn’t afford to live in your same community today. That means your kids…. When they start their families…. They can’t come home. They can’t afford it.
There are thousands of really smart people trying to solve this problem right now around the country. Real estate ownership is the fastest way to building long term wealth. Everyone deserves that opportunity. The solutions probably won’t look like a 21 year old buying a brand new 2,150 sq. ft. house. Housing is going to have to look different than generations of the past have grown accustomed to. We need to collectively recognize this shift rather than bury our heads in the sand. Townhomes, garden homes, patio homes, duplexes, quadplexes, condos, multi family homes, accessory dwelling units, and traditional single family homes are all housing options that we must embrace as reasonable places for people of different life stages to lay their head down each night. The long term path we’re on right now is financially catastrophic to our kids. There are solutions, but we have to change.