A rental-based society is becoming the standard in America. Across the planet, there are many countries in which the number of renters is greater than or almost equal to homeowners. Switzerland's home ownership rate was 42.3% in 2022 according to Eurostat; Germany had a 49.1% home ownership rate in 2023; South Korea's home ownership rate was 56.2% in 2022. In the United States the home ownership rate sits at 65.6% as of July 30, declining from it's peak of 69.2% in Q4 2004, according to the U.S. Census Bureau. As difficult as it really is to buy a home today, I still believe it is attainable and can be a reality.
The American Dream
According to a survey by Bankrate from March 6-8 this year, 78% of Americans consider owning a home a part of the American Dream. In the United States, anyone can become successful and prosperous through hard work and determination. Americans have the right to the pursuit of happiness as stated in the Declaration of Independence. Thomas Jefferson borrowed the idea of "life, liberty, and the pursuit of happiness" from John Locke's "life, liberty, and estate (property)"in Two Treatises of Government. Americans have the natural right to own property and to pursue happiness. Owning a home is a symbol of success and homeowners tend to be happier because they will have higher incomes, more wealth, stability, security, and independence.
The American Reality
Homeownership is less affordable than it has been in decades. As of now, renting is more affordable than owning a home in every one of the 50 largest metropolitan areas in the United States according to Realtor.com. 78% of Americans cite unaffordability as their reason for being unable to own a home according to a survey by Bankrate. Lower incomes, high home prices, and not enough money for a down payment are top reasons Americans cannot afford to buy a home. Wages have not kept up with rising prices. According to a report released by the Harvard Joint Center for Housing Studies last year's median home sales prices were about 5 times the median household income and since then has gotten worse. Inflation has also outpaced incomes leaving people unable to save up enough for a down payment, and with mortgage rates climbing to their highest levels since the early 1980's they can not afford to make the mortgage payments required.
Take Action
Despite all of the obstacles Americans currently face today, I see plenty of opportunity to own a home that won't leave you living paycheck to paycheck although it may require some creativity and effort.
Buy Land and Develop
The average cost to build a house in 2024 is $329,000 or $150/Ft2 (not including land) according to Forbes. A 1,000 sq ft home can cost you between $100,000-$200,000 to build while a 5,000 sq ft home could cost you between $500,000-$1,000,000 depending on materials and finishes. The cost of building is still cheaper than buying as the median sales price of an existing-home in the U.S. as of June 2024 according to the National Association of REALTORS® is $426,900.
Unconventional Financing
According to Bankrate, 50% of Americans who've applied for a loan since March 2022 have been denied. There are many people that can pay a monthly mortgage bill and have a decent down payment but cannot qualify for a mortgage. According to the U.S. Census Bureau, in 2022 nearly 40% of U.S. homeowners owned their homes outright, that's 33.3 million single-family homes and condos. All it takes is negotiation with these homeowners and you may own a home before you know it whether it's seller financing, lease option, an owner carry-back mortgage, land contracts, etc. Contact me for more information about unconventional financing.
Down Payment Assistance
For the people that can afford a monthly mortgage but do not have enough saved up for a down payment, there is the still the option of conventional financing. Down payment assistance programs are funded by the government or non-profits. There are closing cost grants, down payment grants, first-time home buyer grants, and home repair/renovation grants offered by banks of the government. Down payment assistance loans tend to be offered by the bank/mortgage company which may forgive or defer your loans depending on the programs your financial institution offers.
0% Down Financing
A couple examples of financing are Veterans Affairs (VA) loans and United States Department of Agriculture (USDA) loans which are mortgages backed by the government. VA loans were created to support veterans who returned the U.S. after WWII and are offered only to veterans, active service members, and eligible surviving spouses. USDA loans were created to serve people who have lower incomes and to encourage home buying in rural and some suburban areas. There are income limits for USDA but the loans are not necessarily only for low income earners and may be a great option for those who plan on buying in rural areas anyway. Both of these loans require no down payment offering 100% financing and if you can manage to get closing costs covered by the seller you can potentially close on a home with little to no money. Contact your local loan officer for more information on VA & USDA loans.
Time Is of the Essence
The 30-Year Fixed Rate Mortgage Average in the United States has been declining weekly and currently sits at 6.46% as of August 22 and is expected to average 6% in 2025. As more and more people begin to accept the current mortgage rates as the standard, demand for homes will increase significantly when rates begin to drop; even a .5% decline and especially a 1% decline will create similar situations like the ones we saw a couple of years ago. Think ahead and ask yourself if you really want to be in a bidding war, pay for even higher prices than they are now, or if you want to deal with less and less homes on the market. The sooner you buy the sooner you can begin to build wealth, you can always refinance when rates drop but renting will just keep you renting. Renting is a short-term plan and it should be. Renters age at a faster rate than homeowners according to a study by the Journal of Epidemiology & Community Health. Read my article The Home Buying Process.
Get started on your real estate journey
No matter how insignificant your efforts may seem, even the smallest steps propel you forward and builds momentum. I encourage you to act now and make your dreams a reality. Make a statement by owning a home.
Curious about building or investing in real estate? Send me a message and I'll let you know what doors are open for you.
I am a local real estate agent residing and working out of Lake Geneva, WI. Growing up in Walworth and working in residential construction on and around Geneva Lake I developed a diverse skill set that allowed me to help guide people through the real estate market in Walworth County.
I am a strong advocate for homeownership. Today, home affordability has reached the lowest levels in recent history. It is more affordable to rent than to own a home in an increasing number of areas in the United States. I will work hard to help you maneuver the current real estate market so that you can own property, build wealth, and gain freedom; so I can help you achieve The American Dream.
262.215.5296
223 Cook St, Suite J
Lake Geneva, WI 53147
