Housing Affordability Hits a 38-Year Low — Here’s How to Stay in the Game
What record-low housing affordability means for your wallet — and how to fight back.
The News
Buying a home just got harder — again.
According to new data from the National Association of Realtors, housing affordability in the U.S. has dropped to its lowest level since 1987. Mortgage rates remain near 7%, home prices are still rising, and incomes haven’t kept up.
The result: the typical American household now needs over 35% of its income just to cover a mortgage on a median-priced home — far above the 25% benchmark for affordability.
Even first-time buyers are being priced out, with down payment requirements and monthly payments at record highs.
What It Means for You
Home ownership is harder to reach — but not impossible.
High mortgage rates and rising prices mean you need stronger credit, larger down payments, or creative buying strategies to compete.
Renting isn’t “throwing money away.”
With affordability stretched, renting while you build savings or improve your financial position can be a smart, temporary move — not a failure.
Patience is a financial skill.
Markets move in cycles. When rates eventually come down, prepared buyers will have the advantage — but those overextending now might regret rushing in.
Investing looks different right now.
Traditional “buy a home fast” advice is being tested. Many investors are shifting to house hacking, partnerships, or smaller multifamily deals to enter the market without stretching too thin.
Moves to Make Right Now
1. Strengthen your credit profile.
Higher rates mean lenders are pickier. Paying down revolving debt and fixing credit report errors could lower your mortgage rate by 0.25% or more — saving thousands.
2. Build your down payment fund.
Set a target of at least 10–20%. Even $300/month in a high-yield savings account builds serious buying power in a year.
3. Explore creative entry points.
Consider house hacking (renting part of your property), buying with a partner, or starting with a duplex or triplex to offset costs.
4. Keep renting strategically.
If buying now would stretch your budget past 30–35% of your income, renting while you build cash and credit is often the smarter move.
The Modern Money Lesson
The housing market isn’t broken — it’s changing.
And in moments like this, the winners are not the ones who rush — they’re the ones who prepare.
Build credit, build cash, build knowledge. Because when the window opens again — and it will — those who stayed disciplined will be ready to walk through it.
Modern Money Influence is here to show you how. Not just how to react to the market — but how to out think it.