3 Things To Do If the Housing Market Will Never Be Affordable for You
Written by
Sarah Sharkey
Edited by
Amen Oyiboke
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
If the housing market feels out of reach, you aren’t alone. Many Americans feel pushed out of the housing market due to high home prices, relatively high interest rates, and low supply. Although the housing market might feel out of reach where you live, that doesn’t mean you don’t have options for your living situation.
Explore the actions you can take if your local housing market feels like it will never be affordable.
Find a Comfortable Rental To Call Home
Contrary to what you might have been told, renting is a perfectly acceptable way to keep a roof over your head. Many want to own a home someday. But many don’t necessarily want the hassles that come along with homeownership, like unavoidable maintenance costs. Plus, buying a house typically makes it more difficult to leave an area if you take a different path in your career or personal life.
Renting comes with an increased amount of flexibility that cannot be underrated. But it can be difficult to settle into some rentals.
If you’ve been making due in a sub-par rental in hopes of saving up to buy a home, it might be time to reevaluate that decision. If you don’t anticipate buying a home anytime soon, it might make more sense to spend a bit more on a more comfortable rental.
For example, if spending another $200 per month in rent could help you get the space you need, it might be worth the extra cost. Of course, you’ll have to run the numbers for yourself. But if you are committing to renting for the long term, putting the effort in to find a space you enjoy living in can be well worth the effort.
Consider a Move
Although homeownership might be unfeasible where you currently live, that doesn’t necessarily mean you can’t afford to purchase a home somewhere else. If you’ve ever considered leaving the city you currently live in, it’s a good idea to factor in potential housing costs before making a big move.
“Moving for affordability is a personal decision that can create real value, but it should be balanced with a commitment to overall life satisfaction,” said Russel Diehl, designated broker and owner of Arizona Network Realty.
Diehl continues, “Lower-cost areas often provide the opportunity to own a home with more space or a desirable location that might be out of reach in pricier markets. But beyond the financial gain, I advise clients to consider factors like local employment opportunities, the quality of schools, access to amenities, and community vibe.”
Of course, moving somewhere new is a major decision. Take the time you need to make an informed decision. If you decide to move, that might put homeownership within reach. But if you decide to stay where you are, be realistic about how that may play out in your finances and your ability to purchase a home. Remember, homeownership doesn’t necessarily need to be a goal. Determine whether or not buying a house is necessary for your situation and goals.
Build a Bright Financial Future
If you decide not to buy a house, renting for the long term can be a smart financial play. That’s especially true if you make it a priority to invest in your long-term financial future.
Below are some ways to help you make the most of your funds while living in a rental.
Build an Investment Portfolio
As a renter, you won’t have to save for unexpected house maintenance costs. Instead, you can use your funds to build an investment portfolio.
Many recommend starting with index funds.
“With acceptable risks, investing through index funds diversification is possible and in the long run someone’s wealth increases gradually,” said Yosef Adde, owner of I Buy Houses LA.
For those who want exposure to real estate in their investment portfolio without owning a physical property, REITs might be the right fit.
“This does not require you to have all the money necessary to own property but you are still able to benefit from the growth potential of real estate sectors,” said Adde of REITs
Build an Emergency Fund
Life has a habit of throwing unexpected expenses your way. Without an emergency fund, you might be put in an uncomfortable situation when an unexpected expense inevitably comes your way. For example, let’s say your car needs a major repair or you have a medical emergency, an emergency fund can help you weather these storms without as much financial stress.
Generally, experts recommend saving between three to six months of expenses within an emergency fund. For example, if you spend $3,000 per month, an emergency fund might be complete with $9,000 to $18,000.
Takeaway
Buying a house might not be feasible for your financial situation in your location. Although it’s tempting to despair over the state of the housing market, it’s more productive to start brainstorming about your next steps. You might decide to move somewhere with cheaper housing to accomplish your dream of homeownership. Or you might dream a new dream by finding a comfortable rental to call home while you build wealth for the long term in other ways.
More From GOBankingRates
