If buying a home seems nearly impossible today, that’s because it is. Home prices have shot up at double the rate of overall inflation during the past decade.
This data is from a recent study by Clever. They compared the median household income and median home price in 1985 with 2024. The data is from the US as a whole. Certain cities across the US, where a lot of millennials live, are dramatically worse than this.
What will make home prices more affordable? Well, simply put, one of three things needs to happen. Home prices need to crash. Mortgage rates need to go down. Or incomes need to shoot higher. Outside of one or more of those happening, buying a home will remain unaffordable.
Generally, in the past, when mortgage rates have risen, home prices have fallen. The last couple years have been unique because home prices have remained stable overall but yet mortgage rates have more than doubled! This made it go from challenging to nearly impossible to buy a home.
So, what do you do? Focus your time and energy on what you have influence over, like increasing your income and investing as much of it as you can. If you do this in the years ahead, no matter what is happening with housing prices, you will be able to build massive wealth.
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Vivi & Shane
