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Many Americans aspire to own a home but find themselves grappling with significant obstacles that hinder their ability to achieve this goal. According to a recent Bankrate report, aspiring homeowners cite two primary challenges: the high cost of living and insufficient income relative to current home prices.
In a survey of 2,267 U.S. adults, conducted in late January, Bankrate identified that 51% of respondents identified the high cost of living, while 54% cited inadequate income as major barriers to homeownership. Among aspiring homeowners, 20% expressed doubts about ever being able to save enough for a down payment and associated costs, with 30% estimating a timeline of at least five years to achieve their homeownership goals, and 10% foreseeing a decade or longer.
Mark Hamrick, senior economic analyst and Washington bureau chief at Bankrate, highlighted the significance of these timelines, emphasizing that waiting periods of five to ten years or the possibility of “never” achieving homeownership represent substantial challenges for individuals and families.
One significant contributing factor to these challenges is the impact of high mortgage rates. The average monthly mortgage payment surged to $2,045 in December 2022, representing a 46% increase from the previous year. Denials on mortgage applications due to insufficient income also rose in 2022 compared to 2021.
Despite expectations of declining rates, recent increases have disappointed many prospective buyers. Hamrick noted the uncertainty surrounding interest rate movements, which can be influenced by unforeseen events such as the Covid-19 pandemic.
Moreover, aspiring homeowners must consider the broader financial implications of homeownership, beyond the initial down payment. These include ongoing maintenance, repairs, and other expenses associated with owning a home. Without adequate emergency savings and financial preparedness, homeowners may face financial strain, potentially leading to increased debt burdens.
In addition to income and cost of living concerns, aspiring homeowners also identified credit card debt (18%) and student loan debt (10%) as significant barriers to achieving their homeownership aspirations.
In conclusion, understanding and addressing these obstacles is essential for individuals and families striving to become homeowners. Effective financial planning, including managing debt, building savings, and evaluating long-term affordability, can help navigate these challenges and pave the way toward successful homeownership.