Home Affordability Reached All-Time Low in 2023

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Guess what? Not long ago, it was common for young adults to follow a simple route to owning a home. First, they'd rent an apartment, often with roommates. Then, they'd save up money until they could buy a starter home, usually after getting married. But now, buying a home has become more expensive. The data is jarring! More people are choosing to keep renting instead. And because of this, investing in buildings with multiple apartments has become more attractive.

Because buying a home has become more expensive, with both housing prices and mortgage rates going up, more people are finding renting to be a better option. Actually, the difference in cost between owning a home and renting an apartment is the biggest it's been in 15 years.

Factors Affecting the Home Prices

From January 2020 to August 2023, the typical price of a house in the U.S. went up by about 38% to $550,000, as per information from Redfin. Factors like higher mortgage rates have made it harder for people to afford homes. According to the National Association of Realtors, the average monthly mortgage payment (based on typical 30-year mortgage rates and home prices) went up by 85% in the last 20 months, from $1,212 in January 2002 to $2,243 in August 2023.

The Renting Alternative

Because owning a home has become expensive, more people are choosing to rent instead. This has caused rental prices to go up over the past three years. 

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