There’s been a lot of hype over the past few years about houses becoming unaffordable for young, first time home buyers. Although it began before Covid, the pandemic, coupled with low interest rates and people staying at home much more, fueled a home buying frenzy that drove up prices.
Now, several years later with interest rates increasing, there even more hysteria that first time homebuyers cannot afford to buy a home. Those who can, are faced with low inventory and competition on many bids.
As someone who has moved 23 times, owned 7 different houses and rented the other times, I’ve been through several boom and bust housing cycles.
I remember to run up in housing prices in the early 2000s after the dot com crash. It happened again around 2006-2008 during the “anyone can get a mortgage” days.
Both times, the media, realtors, banks and “everybody” warned that you needed to buy NOW, before it was too late.
When the crashes came, people who were stretched to make their mortgage payments went bankrupt, lost their homes and eventually moved.
So, I view the latest “housing crisis” with a bit of skepticism.
Is it hard for first time homebuyers to afford a home? Sure, if they are trying to buying in a hot area or if they are expecting to buy a brand new home filled with state-of-the-art appliances, fixtures and features.
The first home I purchased had a long shared driveway with stairs up the middle because it was so steep. Our garage was nonfunctional with collapsing walls and a sagging ceiling. Our windows were painted shut – less than half could be pried open. We had old carpet and a basement that got wet during rainstorms.
Over a period of 4 years, we slowly fixed it up. We replaced appliances as they broke. We had new windows installed. We never did upgrade the bathroom or kitchen. Those renovations were far beyond our budget.
23 years and 6 houses later, I still have never renovated a bathroom or kitchen to state-of-the-art current trends. I’ve never had marble countertops, a rainfall shower, Bosch appliances, or floating kitchen islands.
My current home, which was built in 1999, still has half of its original appliances. I replaced the carpeting with laminate wood-look floors, stained the kitchen & bathroom cabinets, and repainted the bathrooms myself.
This home feels like is brand new to me. My other homes ranged in age from 25 to 100 years old.
I like the idea of having a brand new home custom built for me – but I can’t justify the cost.
So I question the homebuyer “crisis”. Are these buyers looking for an average home in an OK neighborhood? Or are they looking to buy a brand new or freshly updated home in a trendy area?
I have a feeling this crisis is caused in part by their dreams of owning an instagram ready home vs. something realistic for their age and budget.
My parents bought their first home when they were in their early 20s. Neither had a college degree. Both worked low wage jobs. The house was half of a side by side duplex. It had worn hardwood floors with awful carpets. Two of the bedrooms didn’t have closets. The wiring was knob and tube. The basement walls were plastered with old horsehair that poked through. The kitchen had a laminate floor. The bathroom had no shower – just a claw footed tub. The attic was hot and stuffy with stairs cut into triangles like slices of pizza where the staircase turned. I loved that house. We lived there for 5 years and made modest improvements to it including painting the bedrooms, fixing the leaky kitchen faucet and replacing the front weed patch with white gravel stones.
When I was in my early 20s, I probably could have purchased a similar house, in a similar town, on a 2 earner, low income budget. But by then, I was with my wife and her 2 kids. We lived in a pricy part of the city. So we were not able to buy a home for more than a decade, after both of us had worked our way up to modest, middle incomes.
We could have chose to move somewhere cheaper. But we didn’t. The price we paid was a decade of overpriced rentals. The benefits included a better school district, saying in my wife’s familiar neighborhood, and being closer to family and friends.
So perhaps one answer to the housing crisis is a shift in perspective. We all want to live in a picture perfect, beautiful home in a great neighborhood. Most of us want it all right now.
There’s nothing wrong with wanting that.
Most of us just can’t get it – or at least, not immediately.