The Expert Podcast

• Overview: A sobering look at the current state of housing affordability in the U.S., based on an article from Deseret News that raises the question: Can anyone afford to live in America anymore?
• Key Points Discussed:
  • High Home Prices: The average home price is over $400,000. With current interest rates, taxes, and insurance, a typical mortgage payment can be $4,000-$5,000 a month, which is out of reach for many people.
  • Skyrocketing Rent Prices: Rent has also increased significantly, with decent apartments costing $2,500-$3,000 a month in many areas.
  • Example of Brita Joslin: A person earning $83,000 a year struggles to rent an apartment because landlords often require tenants to prove they make three times the rent amount.
  • Breaking Down the Numbers:
    • After taxes, an $83,000 salary gives a take-home pay of $62,250 annually, or about $5,187 per month.
    • Landlords typically want rent to be no more than a third of monthly income, which would be around $1,700. However, finding an apartment at this price is increasingly difficult.
  • Home Prices vs. Income:
    • In 97% of U.S. counties, median home prices are now out of reach for many wage earners.
    • Using Google's mortgage calculator, an example shows that someone with a $83,000 salary might only afford a home priced under $300,000.
  • The Reality of Home Ownership:
    • It’s not always about buying the "dream house" with all the amenities. Instead, consider homes in the lower price range (under $300,000) that may require some cosmetic work.
    • By buying a home in the lower price range, you can lock in a fixed monthly mortgage payment (e.g., $1,739) that won’t increase over time, unlike rising rents.
  • The Benefits of Homeownership:
    • Even though the home may not be brand new, buying a home can provide financial advantages in the long term, including equity building.
    • Renting, on the other hand, is a temporary solution with the risk of rent increases and the possibility of lease non-renewal.
    • In five years, your mortgage payment will remain the same, but rental prices are likely to increase, making homeownership a more stable financial option.
  • Conclusion: While it may seem like homeownership is out of reach for many, there are still opportunities to own a home that can provide financial benefits in the long run. The key is being open to properties that may need a little work but offer long-term stability and equity growth.