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I live in a desirable place where real estate is expensive and going up fast. Even so, there are a couple of places that can be had for $300,000 that a bank will finance. There are several places for considerably less that you wouldn't be able to get financing for.
They aren't fancy upper middle class houses, and they are small. But they are habitable and the locations are good and they should go up in value as the market goes up.
Payment would be $966 a month for the mortgage and a total of $1236 a month for mortgage, taxes, insurance. To qualify for a $1236 payment, you would have to have income of $3708 a month, $44,496 a year.
There are help wanted signs all over town offering $15 an hour ( $31,200 annual). One person slinging hamburgers couldn't qualify, but a couple most certainly could. Or anyone making even a tiny bit over $15 an hour and there are enough of those jobs available.
This is an expensive area. There are plenty of places in the USA where $300,000 will get you a darn nice house and a small house can be had for much less than $300,000.
And incidentally, either one of those places with the $1236 a month mortgage payment is going to cost you at least $1200 a month in rent and one of them would go for $1400 a month rent. An ordinary one bedroom apartment is going to cost close to $1200 a month, so there isn't any huge savings by renting. Although there are a few really crappy apartments that can be had closer to $1000 a month.
People have priorities for their money. Someone would want that house badly enough to get it, and someone else would want that new pickup truck more than they want a house, or even want that big TV and a daily cafe latte more than they want to have a house.
Again, it's not that simple. Yes, rent and mortgage, insurance, and taxes may be about the same monthly. But what happens when the roof needs to be replaced? What about the hot water heater? Heating/cooling system? Anyone who owns a home can tell you things break. And a lot of those things are expensive. If I'm renting, those are costs I don't have to cover.
Most people can afford a perfectly GOOD and comfortable mud hut. Its just that others make rules that wont let them.... and will come tear it down wanting to force them to either go into indentured servitude to buy some luxury monstrosity or sleep on the sidewalk.
Most people can afford a perfectly GOOD and comfortable mud hut. Its just that others make rules that wont let them.... and will come tear it down wanting to force them to either go into indentured servitude to buy some luxury monstrosity or sleep on the sidewalk.
Most people can afford a mud hut but don't want to live in one. It has nothing to do with "rules".
Not counting coastal cities and high cost of living cities, how do most people not afford homes? I used a mortgage calculator, and if a couple has a income of 80k (40k a person), 600 in monthly debt, and a down payment if 10k, they could afford a home of 300k! Even 200k will get you something decent. That’s a pretty nice home in most of America, and making 40k a year isn’t hard. What am I missing?
You are missing PMI, insurance, maintenance, utilities, yard upkeep, HOA fees, updates, repairs, .... . When was the last time you called a plumber?
It can take a while. ITT you have people chastising people for not owning, yet I bet if you went over to the finance forum, the users there would chastise people for buying a home without perfect finances, and for over leveraging too much.
We weren't able to buy until our mid-30s. It just took a while to pay off student loans, to save up money, and to come from a position of financial strength in order to feel comfortable buying. It also took time to develop a stable, well-paying career to the point where we felt comfortable buying. Many younger people are underemployed, or have careers that are unstable all while having to pay off debt. It can take at least a decade post-college to develop a good career. Been there, done that.
Coming from a position of financial strength doesn't mean just being able to afford a down payment and mortgage...it also means you should have savings left over to afford a mortgage for several months in case something happens, or to have saving left for repairs or other emergencies. It can take a lot of time.
Again, it's not that simple. Yes, rent and mortgage, insurance, and taxes may be about the same monthly. But what happens when the roof needs to be replaced? What about the hot water heater? Heating/cooling system? Anyone who owns a home can tell you things break. And a lot of those things are expensive. If I'm renting, those are costs I don't have to cover.
Yes, you do cover those costs if you a renting. Mortgage, insurance, taxes, and repairs are all baked into the rent.
With very few exceptions (the New York City, San Francisco sort of places where there is nothing to buy that is the equivalent of an apartment and there is rent control), rent costs the same or more than purchasing a similar dwelling. Landlords don't buy houses for half of what you would pay for one. They don't get any discount on expenses. Owning rentals is a business. No one is buying houses intending to rent them out for less than it costs to maintain them. Rent is going to cover all of those expenses.
Coming back to add, in my area and many other areas, the landlord is paying more for property taxes than the owner occupied house pays. Here, there is $100,000 deducted from the appraisal for owner occupied and rentals pay the full freight. So tenants are paying more for property taxes than the guy who owns his own house.
Fourthly, you realize that you're basing all these suppositions on the average household, right? So you can assume about half the population would be making less than that, depending on how the data is distributed. In fact, the MEDIAN income in the US is less than the average income, because the super-rich skew the average. So most adults are actually making a less-than-average salary/wage in the US. Those are your people who can't afford to buy a nice house.
This is where the OP went wrong - confusing the MEAN with the MEDIAN.
Yes, you do cover those costs if you a renting. Mortgage, insurance, taxes, and repairs are all baked into the rent.
With very few exceptions (the New York City, San Francisco sort of places where there is nothing to buy that is the equivalent of an apartment and there is rent control), rent costs the same or more than purchasing a similar dwelling. Landlords don't buy houses for half of what you would pay for one. They don't get any discount on expenses. Owning rentals is a business. No one is buying houses intending to rent them out for less than it costs to maintain them. Rent is going to cover all of those expenses.
Coming back to add, in my area and many other areas, the landlord is paying more for property taxes than the owner occupied house pays. Here, there is $100,000 deducted from the appraisal for owner occupied and rentals pay the full freight. So tenants are paying more for property taxes than the guy who owns his own house.
While this is true, the main difference between renting and buying is that your costs are spread out evenly with rent. This is true more so in a condo setting where your fees will pay for major exterior maintenance like a new roof, exterior paint, or siding. However, in a standard single family home, chances are that you aren’t putting aside that money every month to put on a new roof, etc. Plus in many cases, maintenance may be severely deferred with rentals to the extent that the current tenant may not get certain upgrades without paying for a significant increase in rent.
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