A mother on Long Island pays $3,850 to rent a one-bedroom apartment and says she can’t afford a home with a daycare for her child. Is now a bad time to buy?
With Halloween right around the corner, potential homebuyers don’t need to visit a haunted house for shelter — they have current housing prices for that.
At least, that’s what happened to TikTok user @sarahjilllutz, who goes by the name Sarah. She posted a TikTok describing the struggle of trying to find an affordable home in the tri-state area for herself, her husband, and their young daughter.
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“We just have to work, work, work to pay off our mortgage,” says the Long Island mother. “We want a better life than that.”
Sarah says that she currently does not have a nursery or a place to keep her daughter’s books and toys. But even though her income from nursing plus her husband’s income from occupational therapy provides them with a good living, they still can’t afford homes in and around New York City.
Sarah says she’s seeing homes for $50,000 or $100,000 more than asking. But if you’re determined to move to a new home, does that mean now is a bad time to buy?
Look at market factors
Sarah is not alone in thinking this is a bad time to buy. The same sentiment applies to 84% of consumers, according to the October 2023 Fannie Mae Home Buying Confidence Index.
Home sales in September were down 15% compared to the same period a year earlier, the National Association of Realtors (NAR) reports. Lawrence Yun, chief economist at NAR, blamed “limited inventory and low housing affordability” for the decline. The growing inventory of homes suggests that buyers can be more selective than they were a few months ago.
In addition, rising interest rates – which have led to higher mortgage rates – have helped shift the market in buyers’ favor by slightly suppressing demand, giving eager buyers a chance to negotiate with sellers.
But before you start opening houses, whether you’re a first-time homebuyer or this isn’t your first rodeo, make sure you can get pre-approved for a mortgage. You don’t want to find your forever home and then realize you can’t afford it. Getting pre-approved for a mortgage means you can create a more comprehensive budget for your home purchase.
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Do you have enough savings?
Sarah and her husband currently pay $3,850 to live in a one-bedroom apartment on Long Island, New York, and that amount is rising.
“We are wasting our savings on this apartment,” she says.
Although down payments can vary, Sarah knows she needs to save aggressively so she can buy the home of her dreams. To know if you’re ready to start house hunting, personal finance celebrity Ramit Sethi has this advice: “If you don’t save a 20% down payment, you’re not ready to buy a home.”
This number will save you a lot of money in the long run, by making you attractive to lenders first, which will make the mortgage process less stressful and time consuming. Plus, when you finance a smaller amount up front, you’ll end up saving a lot on interest payments.
Many young people have trouble saving for a mortgage these days even if they work well-paying jobs, like Sarah and her husband. Although there’s not much you can do about rising prices, a savings calculator can help you figure out a plan to save enough wealth to buy the home of your dreams.
Choose – or change – your language
Many of the comments on Sarah’s video encourage her to move from the New York area to cheaper cities in Ohio or Georgia. But Sarah has been telling her TikTok followers for a while that she wants to stay in the tri-state area since her family is close by and she can help with childcare.
Sarah is right that moving away may cost her more than relying on family to help her care for her daughter. Child care can cost you around $10,000 per year for just one child.
Housing costs in places like Alabama and Oklahoma may be lower, but you may also come without the resources you need to afford it, such as a high-paying job or family nearby to help care for your children.
If you decide to stay in a more expensive housing market and can’t afford a down payment, don’t worry. You can still build wealth by renting through increased investment and loan repayments, without having to worry about your mortgage — and all the costs that come with owning a home.
Ultimately, it’s your choice if you want to buy now. But it’s easier to make this choice when you have the full picture.
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This article provides information only and should not be construed as advice. They are provided without warranty of any kind.