The Problem With Housing

US housing costs have skyrocketed in the last 40-50 years. In 1980, the average home purchase price in the US was just $47,200. After 44 years, the average purchase price for a home is $420,400. That is super expensive. Wages have indeed increased since then, too, but the increase in housing costs has bypassed wages by a lot, too. In addition, to the increase in housing costs over the last 40 years, it is expected to keep increasing. The all-time high for the purchase price of a house was in June 2024. So the prices have decreased a little bit, but they are expected to keep rising dramatically.

This makes it almost impossible to buy a house if you are below the middle class because it is simply too expensive, and you would never get approved for a loan. It is sad to me how expensive housing is and that most people now have to rent, which has its downsides.

It is not just buying houses that has gotten a lot more expensive, renting a home has also gotten very expensive. The average for renting a home in the US is about $1,500 per month. In 1980, this number was astonishingly low: $895 per month. For low-income people in the US, it can be very hard to afford the rent, and sometimes have to spend over half their salary to cover the rent.

I think that the government needs to implement a program to help people afford rent. Where depending on how much money you make, each month you’ll receive a portion of the money to cover your rent. This would help resolve the existing housing crisis and stop it from getting worse. This is because if you don’t do anything housing prices and going to make renting unaffordable. Also, getting an affordable home is hard because mortgage rates have been high recently. It is even harder because of credit cards. This is because most credit card users mismanage their credit cards. This leads to buying things that they can not afford.

In the modern economy and the way that credit cards work, charging you huge amounts of interest if you don’t make payments. It makes it so that the majority of Americans misuse credit cards. This makes it so that interest rates will be very high for you, up to 15%. Not only that, but you probably will be paying quite a lot of credit card debt. Especially since the average household in America has over 5000 dollars of credit card debt, also, you need to provide a down payment to even get a mortgage. Traditionally, you will make a 20% down payment to get a better interest rate on your mortgage. But, if you don’t have enough savings, you could do a 3.5% downpayment, which some poorer people do. But there is a huge problem with this. If you do that, then you could pay up to 10% in interest on top of the principal. Also, you could pay up to $200/month in PMI to the mortgage provider.

In summary, you should be paying your credit card debts, or you could encounter the following problems:

• You might not be accepted for a mortgage

• You may be accepted but may have a higher interest rate

• You may not be able to do more than a 10% downpayment on a house

• You would also be paying about $200/month in PMI

So, make sure that you always pay your debts on time and in full to get a higher credit score. This makes sure that you will pay low interest on loans and don’t get into financial trouble. If you don’t pay, you could eventually go into bankruptcy, which could ruin your life.

Well, I hope you enjoyed this issue. I am excited to keep creating content for you guys and growing my newsletter. Since donations are not currently accepted on the site. Email [email protected]. It would also be very helpful if you could ask other people to join the newsletter. Have a great week and I will see you next week.

Jacob Gans

Friday Finance