Are Financial Advisors Worth It? Insider Tips You Should Know
Are Financial Advisors Worth It? Insider Tips You Should Know
Most of the people that live in San Francisco can’t actually afford to own a home in San Francisco.
California has three of the top 5 (and six of the top 10) cities where homeownership is nearly impossible, according to a study from GOBankingRates. More than 3 in 4 San Francisco residents can’t afford a home there, as median listing prices are nearly $1.2 million.
“You’d have to earn $200,080 a year to comfortably cover a monthly mortgage of $5,002,” the study says. “However, the median household income in San Francisco is $103,801.”
Homebuying is getting exceptionally more expensive every month (and now every year) that passes. Home values are climbing, even though salaries aren’t. Even though we still really want to make the plunge to buy a home, it’s becoming less likely for many. Some of us have permanently given up on the homebuying dream, which hasn’t been easy, as soaring rent prices aren’t doing our finances any favors.
Being able to afford a home is scaring more people into renting, and now boarding with a roomie.
Zillow says nearly one-third of working adults are living with a roommate (this is separate from a significant other or partner). Twelve years ago, only 21 percent were living with roommates; 28 years ago, it was 23 percent.
“As rent consumes a growing share of household income in many cities, some people must relocate or find ways to offset rising prices,” Zillow says. “An increasingly popular way to cut costs is by adding a roommate.”
These figures include two adults living together or an adult child living with their parents. Generally, it’s people who would be living in a different situation if their finances or other circumstances allowed it.
Renters don’t have it so easy. They can’t afford to live in major cities (you know, where all the jobs are), so if they do end up working in there, they might not make enough money to live on their own. They could stay in those cities with roommates or move back home with their parents in hopes of saving money, but in a job that might not pay as well as others if they had opted to stay in bigger cities. Regardless of circumstance, they aren’t making it on their own.
Zillow says it’s almost always a financial reason for doubling up. Big cities like Los Angeles (46 percent of renters are living with a roommate), Miami (41 percent), and San Francisco (36 percent) have some of the highest costs of living in the country. Even more, those who live with a roommate earn less than someone living on their own, making 67 cents for every dollar.
You don’t need a unicorn status of a perfect credit score to buy a home. You can ditch your roommate or parents with a decent – if not fair — score.
Technology solutions company Ellie Mae says there was a small dip in average credit scores for millennials year-over-year. The average FICO score for all closed loans dropped from 725 near the end of 2016 to 723 in November 2017. This is good news for young would-be buyers who are afraid they don’t have enough credit history to get one.
“With the average credit score dipping, lenders are extending credit to borrowers who may have had no previous access to the housing market,” says Joe Tyrrell, an executive VP at Ellie Mae. “While these scores are still significantly above the levels seen a few years ago, it is encouraging to see increased accessibility, especially as the millennial population continues to pursue home ownership.”
While FHA refinance loans saw the biggest drop in average credit scores for closed loans (678 to 669) Ellie Mae says millennials are more likely to buy a home with a conventional loan. The study shows that those loans still have the highest FICO scores among millennials (745).
As lenders are lowering their standards for borrowers to buy homes, home values are still climbing high. In 2017, the nation’s housing stock went up $2 trillion, bringing the total value of all homes to $31.8 trillion, according to Zillow.
This past year, the value of homes has grown 6.5 percent, the fastest in four years, Zillow says. In 2013, it went up 8 percent, as the housing market was making a recovery from the recession.
“For many households, a home is the single largest source of wealth, but the collapse of the housing market and the ensuing Great Recession demonstrated the importance of housing to the U.S. economy as well,” Zillow says. “The housing market has gained $9 trillion since the lowest levels of the recession.”
Columbus, Ohio saw the biggest percentage jump in 2017. There, the market went up 15.1 percent — more than double the national average. San Jose, Calif. (13.5 percent), Dallas (12.3 percent), Seattle (11.7 percent) and Tampa (11.3 percent) also saw big jumps this year, rounding out the top 5.
But expensive homes are only scaring Americans into renting for longer. Zillow says renters spent nearly $486 billion in 2017 — nearly $5 billion more than 2016.
“Renters spent more than ever on rent this year,” Zillow senior economist Aaron Terrazas says. “But the amount they spent grew at the slowest pace in recent years as more renters transitioned into homeownership and new rental supply slowed rent growth across the country.”
The amazing growth in home values is up across all homes in the U.S., including those owned by seniors.
The National Reverse Mortgage Lenders Association says for homeowners 62 years of age and older, equity went up $6.5 trillion in the third quarter of 2017 alone. Retirees got it good.
“Housing wealth continues to be a reliable source of economic security for retirement-aged adults,” says NRMLA president and CEO Peter Bell. “This is as true for people who want to stay in their own homes as it is for those who are ready to sell their property in order to access the equity they have built up over time.”
In the second quarter of 2017, home equity rose $6.4 trillion. It’s steadily risen every quarter for the last five years.
Published by Debt.com, LLC Mobile users may also access the AMP Version: We Can’t Afford to Buy Homes Where All the People Are - AMP.