According to Redfin research, just 21% of listed homes in the U.S. are affordable for the average household—“affordable” meaning that the monthly mortgage payment would consume 30% or less of the average person’s monthly income. In fact, the average American would have to spend 42.9% of their income to afford just a median-priced home.
Renters aren’t fairing better, with average rent prices up 18% in the last 5 years—outpacing inflation and placing a heavier financial burden on those who already tend to fall on the lower end of the economic scale. Affordable housing programs exist, but most are overloaded and many have waitlists that are over a decade long.
Many factors play into how expensive it is to get housing, whether you’re renting or trying to buy your own home. The economy, mortgage rates, a physical housing shortage, and the fact that salaries have not kept pace with the rising cost of housing, even if you account for inflation, all play a role. Making housing more affordable across the board would require big, systemic changes. But while you’re working with what we’ve got right now, here are some tips for navigating housing unaffordability.
If you’re renting:
Reach out to a local real estate agent
Get in touch with property management companies directly
If you have decent credit, solid employment, and a good rental history, reaching out to a property management company directly can be a great way to find an affordable rental. Do a little research to find out which companies work with lower-priced rentals in your area, and then give them a call. Even if you don’t see an exact match on their website, they may have other properties in the pipeline, and applying early could give you an advantage.
Tap your network
Word-of-mouth recommendations usually come with the added benefit of a referral. Landlords may be more willing to negotiate or less stringent with application requirements if you’re referred to them by someone they know and trust. Additionally, the body of research behind social proof demonstrates that you’re actually more likely to get the place if you’re referred because people prefer to do business with people they know.
Stuck on that downpayment? It may be easier to qualify than you think—especially if you’re a first-time homebuyer. Some programs offer loans that require a downpayment as low as 3.5% for first-time buyers, and if you’re in a rural area, check out the 0% down USDA loan. Also don’t forget to look into first-time homebuyer programs in your state, county, and city. Many offer grants or forgivable loans to assist first-time buyers with making their down payments.
If you're buying:
Shop around for your mortgage
Don’t forget to look into unconventional loan types, too, such as the FHA loan or the USDA loan for lower rates and/or lower down payment requirements.
Consider a fixer-upper
Look outside your preferred location
If the cost of living in your city is very high, and you don’t have a lot keeping you there, it could be time to consider a move. This tactic is especially popular with people who work from home and can take their employment with them. Look for cities with a lower cost of housing that also meet your needs in other ways, such as the accessibility of your favorite hobbies, and social activities, and lifestyle factors like walkability.
If you want to stay in your current city, try broadening the scope of your search (especially if it’s been narrow). Sometimes looking for a home just a few minutes outside a very popular location can result in significantly lower rental prices, while the convenience isn’t markedly different.