Homeownership may be the American Dream for many people, but it’s a goal that’s become increasingly difficult to achieve. A report from Attom Data Solutions released earlier this year reveals that owning a home is affordable in just 41% of counties across the nation. To flip that statistic, it means homeownership is unaffordable in most of the U.S. for the average household.
A big reason why homeownership has been even less affordable lately is inflated prices. Buyer demand surged during the pandemic, and that drove home values up. As such, potential buyers who may have once been in a position to buy in certain neighborhoods are now finding those same areas just aren’t in their budgets.
If you’re feeling like homeownership is out of reach, here are a few options to consider.
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1. Wait for inventory to open up
One reason why it’s so hard to buy a home right now is that limited inventory has caused an increase in home prices. But once there are more homes available to buy, property prices should start to drop back down. Of course, without a crystal ball, it’s hard to know exactly when inventory will reach a healthier level. But it’s fair to assume that things could pick up in the next few months, as spring has, historically speaking, been a popular time to put properties up for sale.
Progress with regard to the pandemic could also result in an uptick in inventory. A lot of sellers may be hesitant to list their homes when there’s so much uncertainty, but if you sit tight a bit, the housing market could change for the better. Of course, the longer you wait to buy, the more you run the risk that mortgage rates will climb, but seeing as how they’re still pretty competitive, we may find that they’re attractive a year from now.
2. Save up more of a down payment
Today’s home prices are out of reach for a lot of people. But if you wait a bit longer to buy and work on socking away more money for a larger down payment, you may be in a better position to buy a home later this year or early next year. A lot of people are finding ways to eke out savings during the pandemic, whether that’s from having fewer social obligations or not commuting. If you keep saving diligently, you may find that you can swing a home purchase without busting your budget.
3. Buy a home with rental income potential
You may have a hard time affording a home right now, but what if you had extra money coming in each month to help cover your costs? If you buy a home you can partially rent out, that’s one possibility for paying the bills. All it really takes is a separate, private space — like a finished basement — to make having a tenant a viable option, at least for a period of time. Of course, not all homes are zoned for rentals, so you’ll need to do some digging in the area you’re looking to buy in. But if you can get, say, $1,000 a month in rent, that could make it easier to swing a home purchase.
It’s unfortunate that homeownership has gotten increasingly less affordable, but don’t despair. If you can’t manage to own right now, pursue a different path — whether that means sitting tight for a few months, boosting your down payment, or compromising by taking in a tenant. Whatever you choose, you do have options, so don’t write off the idea of having a place to call your own.
View more information: https://www.fool.com/the-ascent/mortgages/articles/3-things-to-do-if-homeownership-seems-out-of-reach/