As of September 2023, the reported median home price in the US was $412,000.00. In the state with the least expensive housing, that number was $229,000,00. This is according to Forbes.
But to be conservative, let's say you're a prospective homeowner in his/her early to mid 30s who buys a $200,000.00 house on a 30-year mortgage. If you were to sign a contract two days ago, on December 21, 2023, you would be paying roughly 6.67 percent interest. Had you been unlucky enough to sign the contract in September, October, or November of this year, that number would be in excess of 7 percent.
For context, when Biden first took office that was a meager 2.77 percent, and the absolute highest it ever got under Trump was 4.94 percent. But anyway, 6.67 percent. The cheapest it's been in the last 6 months, so you buy.
What does 6.67 percent interest mean? It means that, just to keep the debt from growing, you'll need to have $13,340 that you can afford to part with, per year. Once you've coughed this much up, as opposed to spending it on, I don't know, healthcare for your children and other things that are definitely not important, the bank will expect you to make an additional payment. You know, to actually repay the mortgage itself. Which would be around $6,660 a year.
In other words, unless you're in a financial situation where you can part with $20,000 every single year, it is impossible to afford what's generally considered an affordable home in this economy.
Now, you might say, "Well they wouldn't be paying rent so it's fine". Let's examine a few more statistics for some added context. As of October the median American's savings account balance was $1,200.
In August the average national rent price was $1,372, or $16,464 a year.
Of course, this average includes more expensive states, where a decent and sizable home wouldn't sell for $200K. Your average Alabaman isn't paying that much rent anyway. But even if we were to assume that your average Alabaman renter is, and we add that $1,200 of extra cash they have lying around, they would fall $2,340 short. They haven't a dime left to spend without seriously tightening their belt elsewhere; if they can't muster this, then homeownership will remain of their reach.
I'll reiterate: at 4.94 percent interest, what you'd have to pay yearly is $16,546 or so. This is a roughly $3,500 dollar difference, and that's the worst it ever was under Trump. The worst. Whereas under Biden, the current rate is at a 6-month low.
