The pace of home price growth slowed again in the first quarter compared to its highs of a year ago, but there are wide variations in housing trends across the country, the Federal Housing Finance Agency said.
The FHFA’s House Price Index climbed up 4.3% on an annual basis in the first three months this year, cooling from 8.4% in the fourth quarter of 2022. The latest number shows further slowing from the red-hot pace set a year ago, when home values surged by almost 19% from the year before, the largest upswing in recent memory.
The combined impact of higher mortgage rates and limited inventory is continuing to bring about a noticeable deceleration in prices, but the overall index has still come in higher each quarter since 2012.
“U.S. house prices generally increased modestly in the first quarter” said Anju Vajja, principal
associate director in FHFA’s division of research and statistics, in a press release. “However, year-over-year prices in many Western states have started to decline for the first time in over ten years.”
Among the seven U.S Census divisions, the Pacific and Mountain regions, both located in the Western U.S., were the only two that showed prices depreciating annually. Values fell 2.4% and 0.1% in Pacific and Mountain divisions, respectively.
Seven states, many of whom saw their housing markets soar the most during the pandemic purchase boom, posted a decline in prices compared to a year ago, with Utah seeing the largest fall of 4.3%, followed by Nevada and California at 3.6% and 2.9%.
The FHFA findings largely mirror the trends reported by other researchers, including CoreLogic, who recently saw prices fall in 10 Western states in March.
On the other end of the spectrum, though, property values in the South Atlantic division continue to show strength, with prices rising 7.2% in the first quarter, the FHFA said. South Carolina led the nation in the pace of home price growth, up 9.5% since the first three months of 2022. Prices in neighboring North Carolina surged almost as much, rising 9.4%. Maine rounded out the top three with 8.9% annual growth.
On a quarterly and monthly basis, national home prices also headed upward, running counter to some previous predictions from economists, who said housing costs would likely decline going into the spring. House prices inched up 0.5% from the final three months of 2022, compared to 0.2% in the previous quarterly index. Meanwhile, prices climbed a seasonally adjusted 0.6% between February and March.
Whether more recent trends represent a leveling off of prices nationally is still in question, other data released this week shows housing costs moving in the same direction at an even more rapid pace. The monthly change recorded by the FHFA was a smaller increase than the rise in the CoreLogic S&P Case-Shiller Index, which was also released this week. Case-Shiller saw prices head up 1.3% between February and March, showing “counterintuitive strength,” according to CoreLogic Chief Economist Selma Hepp.
“The very meager inventory of existing homes is putting buyers in a position of having to pay over the asking price, and as a result, driving early spring price gains well beyond what is traditionally seen during this period,” she said in a statement.
Over the past few months, I’ve occasionally used the “Ask the Readers” feature at Get Rich Slowly to poll people about their budgets and spending habits. So far, I’ve asked folks to share their spending on food, clothes, gifts, and health insurance. Now I want to look at a bigger item in your budget — probably the biggest. Let’s talk about how much you spend on housing.
More than other expenses, your housing costs are influenced by where you live. Some parts of the country — and some parts of the world — are much cheaper to buy a home or to rent an apartment. It’s cheaper to live in Boise, Idaho, for instance, than to live in New York City. Generally, however, there are reasons for these price disparities. Most people are willing to pay more to live in New York than in Boise, and that drives prices higher. It’s a trade-off.
I’m a firm believer in the Balanced Money Formula, which says that if you pay too much for housing, you’ll have less to spend on other wants and needs, and you’ll always feel pinched, as if you can’t afford anything. On the other hand, if you limit your housing expense to below 25% of your take-home pay, you should have lots of breathing room.
For my own part, I pay a little more than I ought to for housing. After a few years of spending $0 per month (because we paid off the mortgage after selling the blog), I’m now paying $950 for my apartment in Portland. That’s 36% of my take-home pay, and a fine example of not practicing what I preach. But I’m able to get away with this because:
I’m still saving more than 20% of my income.
I have ample emergency savings.
The rest of my spending on needs is low.
My spending on wants is extremely low, and my relatively high housing expense doesn’t make me feel pinched.
As I mentioned before, this $950/month figure seemed high to me until I started comparing notes with other Portland renters. Yes, there are places that cost less, but they all involve compromises I’m unwilling to make right now. (The biggest compromise? Location. I want to be able to walk almost everywhere, and I can do that from this apartment. That’ll help me save money on auto expenses, which balances things a little.)
What about you? Where do you live and how much do you pay on housing? What percentage of your budget does this represent? Does your housing payment cramp other parts of your life? Or have you intentionally kept it low so that you can afford to spend on other things? If you were to start over again from scratch, what sorts of housing choices would you make? Would you rent? Would you buy? Would you move to another part of the country (or the world)?
Reminder: I’m not one of those who believes that buying a home is always best. Nor do I believe that renting is always best. Either can be a fine choice, but you have to be clear on your financial goals and you have to take into account your local real-estate market. To help make an informed choice, use something like the New York Times rent or buy calculator. In my case, I opted to rent.
Conventional loans are the most popular kind of mortgage, but a government-backed mortgage like an FHA loan is easier to qualify for and may have a lower interest rate. FHA home loans have attractive qualities, but borrowers should know that mortgage insurance usually tags along for the life of the loan.
As of March 2023, new FHA borrowers will pay less for insurance. The Biden-Harris Administration announced it was reducing premiums by .30 percentage points, lowering annual homeowner costs by $800 on average. The administration hopes the cuts will help offset rising interest rates.
What Is an FHA Loan?
The Federal Housing Administration has been insuring mortgages originated by approved private lenders for single-family and multifamily properties, as well as residential care facilities, since 1934.
The FHA backs a variety of loans that cater to the specific needs of a borrower, such as FHA reverse mortgages for people 62 and older and FHA Energy Efficient Mortgages for those looking to finance home improvements that will increase energy efficiency (and therefore lower housing costs).
But FHA loans are most popular among first-time homebuyers, in large part because of the relaxed credit requirements.
Recommended: Tips to Qualify for a Mortgage
FHA Loan Requirements
If you’re interested in an FHA home loan to buy a single-family home or an owner-occupied property with up to four units, here are the details on qualifying.
FHA Loan Credit Scores and Down Payments
Borrowers with FICO® credit scores of 580 or more may qualify for a down payment of 3.5% of the sales price or the appraised value, whichever is less.
Those with a poor credit score range of 500 to 579 are required to put 10% down.
The FHA allows your entire down payment to be a gift, from a family member, close friend, employer or labor union, charity, or government homebuyer program. The money will need to be documented with a mortgage gift letter.
FHA Loan DTI
Besides your credit score, lenders will look at your debt-to-income ratio, or monthly debt payments compared with your monthly gross income.
FHA loans allow a DTI ratio of up to 50% in some cases, vs. a typical 45% maximum for a conventional loan.
FHA Mortgage Insurance
FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% of the base loan amount, which can be rolled into the loan. As of March 2023, monthly MIP for new homebuyers is 0.15% to .75% — most often 0.55%.
For a $300,000 mortgage balance, that’s upfront MIP of $5,250 and monthly MIP of $137.50 at the 0.55% rate.
That reality can be painful, but MIP becomes less expensive each year as the loan balance is paid off.
There’s no getting around mortgage insurance with an FHA home loan, no matter the down payment. And it’s usually only shed by refinancing to a conventional loan or selling the house.
FHA Loan Limits
In 2023, FHA loan limits in most of the country are as follows:
• Single unit: $472,030
• Duplex: $604,400
• Three-unit property: $730,525
• Four-unit property: $$907,900
The range in high-cost areas is $1,089,300 (for single unit) to $2,095,200 (four-unit property); for Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the range is $1,633,950 (for single unit) to $3,142,800 (for four-unit property).
FHA Interest Rates
FHA loans usually have lower rates than comparable conventional loans.
The annual percentage rate (APR) — the annual cost of a loan to a borrower, including fees — may look higher on paper than the APR for a conventional loan because FHA rate estimates include MIP, whereas conventional rate estimates assume 20% down and no private mortgage insurance.
The APR will be similar, though, for an FHA loan with 3.5% down and a 3% down conventional loan.
First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.
FHA Income Requirements
There are none. High and low earners may apply for an FHA loan, but they must have at least two established credit accounts.
Recommended: How to Afford a Down Payment on Your First Home
Types of FHA Home Loans
Purchase
That’s the kind of loan that has been described.
FHA Simple Refinance
By refinancing, FHA loan borrowers can get out of an adjustable-rate mortgage or lower their interest rate.
They must qualify by credit score and income, and have an appraisal of the property. Closing costs and prepaids can usually be rolled into the new loan.
FHA Streamline Refinance
Homeowners who have an FHA loan also may lower their interest rate or opt for a fixed-rate FHA loan with an FHA Streamline Refinance. Living up to the name, this program does not require a home appraisal or verification of income or credit.
The new loan may carry an MIP discount, but you’ll pay the upfront MIP in addition to monthly premiums. An exception: The upfront MIP fee of 1.75% is refundable if you refinance into an FHA Streamline Refinance or FHA Cash-out Refinance within three years of closing on your FHA home loan.
Closing costs are involved with almost any refinance, and the FHA doesn’t allow lenders to roll them into a Streamline Refinance loan. If you see a no closing cost refinance for an FHA loan, that means that instead of closing costs, a lender will charge a higher interest rate on the new loan.
You’ll continue to pay MIP after refinancing unless you convert your FHA loan to a conventional mortgage.
FHA Cash-Out Refinance
You don’t need to have an FHA loan to apply for an FHA Cash-Out Refinance. Whatever kind of loan the current mortgage is, if the eligible borrower has 20% equity in the home, the refinanced loan, with cash back, becomes an FHA loan.
The good news: Homeowners with lower credit scores may be approved. The not-great news: They will have to pay mortgage insurance for 11 years.
Any cash-out refi can trigger mortgage insurance until a borrower is back below the 80% equity threshold.
FHA 203(k) Loan
In addition to its straightforward home loan program, the FHA offers FHA 203(k) loans, which help buyers of older residences finance both the home purchase and repairs with one mortgage.
An FHA 203(k) loan can be a 15- or 30-year fixed-rate or adjustable-rate mortgage.
Some homeowners take out an additional home improvement loan when the need arises.
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FHA vs Conventional Loans
Is an FHA loan right for you? If your credit score is between 500 and 620, an FHA home loan could be your only option. But if your credit score is 620 or above, you might look into a conventional loan with a low down payment.
You can also buy more house with a conventional conforming loan than with an FHA loan. Conforming loan limits in 2023 are $726,200 for a one-unit property and $1,089,300 in high-cost areas.
Borrowers who put less than 20% down on a conventional loan may have to pay private mortgage insurance (PMI) until they reach 20% loan-to-value. But borrowers with at least very good credit scores may be able to avoid PMI by using a piggyback mortgage; others, by opting for lender-paid mortgage insurance.
One perk of an FHA loan is that it’s an assumable mortgage. That can be a draw to a buyer in a market with rising rates.
The Takeaway
An FHA home loan can secure housing when it otherwise could be out of reach, and FHA loans are available for refinancing and special purposes. But mortgage insurance often endures for the life of an FHA loan. The Biden-Harris Administration recently reduced monthly MIP for new homebuyers to help offset higher interest rates.
Some mortgage hunters might be surprised to learn that they qualify for a conventional purchase loan with finite mortgage insurance instead. And some FHA loan holders who have gained equity may want to convert to a conventional loan through mortgage refinancing.
SoFi offers conventional fixed-rate mortgages with competitive interest rates and cancellable PMI, as well as refinancing. Check out SoFi’s low rate home mortgages.
Qualifying first-time homebuyers can put as little as 3% down, and others, 5%.
View your rate today.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information. SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners. SOHL0622007
Inflation slowed more than expected in July, the result of a dip in gas and energy prices. But soaring housing costs continue to weigh heavily on family budgets. Rents and home purchase prices are up – 17% and 20% respectively – from last year. It seems as if every day there is yet another news story highlighting how so many families are suffering under crushing housing costs.
These costs make up one-third of the Consumer Price Index, meaning they account for a big part of the inflation dilemma. For a little perspective: The shelter component of the CPI increased 0.5% in July, rose 5.7% over the last year, and accounted for about 40% of the total increase in all items other than food and energy.
CPI changes also typically lag real-time changes in housing costs, so we can expect shelter to loom large in future CPI calculations even if rent growth may be slowing down, as some have suggested.
Classic supply and demand mismatch
At the root of high and rising housing costs is the severe shortage of affordable homes both for rent and sale. What we are witnessing is a classic supply-demand mismatch: there are simply not enough homes, particularly those that are affordable to low- and middle-income households. While estimates vary, most analysts agree we have underbuilt housing of all types by millions of homes over the past 20 years.
Economists are beginning to highlight the importance of increasing housing supply to help reduce inflation. As Mark Zandi, Chief Economist at Moody’s Analytics, explained to the Washington Post: “No matter what happens to pricing across most goods, inflation will remain high as long as the cost of housing continues to rise so quickly.” In a more recent tweet, Zandi adds: “Driving [strong rent growth] is a severe shortage of affordable homes, which has been long in the making, and won’t be resolved quickly.”
Jason Thomas, former economic advisor to President George W. Bush, concurs, saying that high inflation can be attributed to the country’s “structural shortfall” when it comes to housing. He notes, “You could really see core inflation down close to target by year end were it not for shelter, were [it] not for primary rents…. When you look at the data in terms of cumulative housing starts it looks to be somewhere between one-and-a-half and 4 million short of what is regulatory compliance costs, as well as local zoning and land use requirements that Residential construction statistics from July 2022 show construction of single-family homes is the weakest since the onset of the pandemic and construction of multifamily dwellings has fallen as well.
The good news
While these facts should give us pause, the good news is there are many policy options that can be tapped now to increase housing supply and improve housing affordability.
At the local level, city governments can:
At the state level, officials can:
streamline the application process to obtain affordable-housing financing,
utilize tax incentives and other measures to spur the conversion of underutilized commercial space to housing, and
work with industry and academic institutions to support innovations in home construction that can reduce costs.
Federal policymakers, in turn, should:
expand and strengthen the Low-Income Housing Tax Credit program, a vital source of financing for affordable rental homes,
pass the Neighborhood Homes Investment Act, which would encourage private investment in entry-level homes for sale in distressed communities,
create federal incentives to help communities implement zoning reforms, and
strengthen efforts to preserve our existing affordable housing stock.
The affordable housing crisis is a national problem requiring a national response, one that is not limited just to Washington, DC, state capitals, or city halls. Fortunately, solutions abound – some big, some small, but all meaningful.
Dennis C. Shea is the executive director of the J. Ronald Terwilliger Center for Housing Policy at the Bipartisan Policy Center.
The United States has never defaulted on its debt, and it remains an unlikely outcome of the current standoff about raising the debt ceiling. But, if it were to happen — which could be as soon as June 1 without intervention — it would further crush an already wounded housing market, according to an analysis by Zillow.
Housing costs would spike by 22% with the rate for 30-year, fixed rate mortgages rising above 8%. There would be 700,000 fewer homes sold in the 18 months after July — that’s almost 12% of the 6 million sales currently expected during that span.
In other words, if you thought this past year of skyrocketing mortgage rates and plunging sales was miserable for the housing market, just wait, there’s more. If the United States defaults on its debts, we can do the past 12 months all over again.
“While we don’t expect a debt default to occur, if it did, it would have unprecedented effects on the financial system,” said Jeff Tucker, a senior economist at Zillow. “This would reduce lending and credit availability throughout the financial system. What that means for the housing market is that the cost of borrowing would rise dramatically and sales would be dropping.”
Triggering a recession
In Zillow’s analysis, interest rates would spike, peaking at 8.4%; and unemployment would surge, peaking at 8.3% from its current rate of 3.4%. This analysis projects what might happen in the event of a prolonged default, and it is not a prediction that a default will occur.
“This would be a scenario of a recession being triggered by a huge contraction in federal outlays,” said Tucker. “Home buyers and sellers finally have been adjusting to mortgage rates over 6% this spring, but a debt default could potentially raise borrowing costs even higher and send the market into a deep freeze.”
Zillow projects the combined impact of buyers and sellers pulling back would wipe out nearly one-quarter of expected sales in some months. If there were to be a debt default, the biggest projected deficit would come in September, with an estimated 23% fewer existing home sales.
The severity of the impact depends a lot on the duration of the drama, Tucker added.
“If the crisis grinds on for longer, all these impacts would last longer and be more severe,” he said. “If it turns out to be a more short-term problem, there would be shocks but I could see the situation where it could come back relatively quickly.”
In the event of the debt ceiling not being addressed, mortgage rates would likely climb quickly as investors become worried about almost every type of bond.
Government issued Treasury bonds have been considered a risk-free, safe-haven for investors. If they suddenly carry risk, Tucker said, “it is an earthquake on which everything else is built.”
Uncertainty in Treasuries being repaid will lead investors to require greater return for purchasing them. Mortgage rates tend to follow yields on 10 year Treasury bonds and would likely rise, too.
“Treasury bonds are used as collateral to back all kinds of loans,” said Tucker. “If you have to second guess the value of collateral, everyone across the board is less willing to lend and only willing for a higher return. It is a picture of contagion and a credit crisis spreading. Everyone is suddenly questioning all kinds of lending.”
With about three weeks till the point at which the government can no longer pay its bills — known as the ‘X-date — the point is approaching when that risk will begin to be priced into lending, if the crisis is not resolved.
“Right now, it’s contained to short-term securities, like one month Treasuries, which have been breaking records,” said Tucker. “It is a looming risk about a month away, so it isn’t yet wreaking havoc on 30-year mortgage rates. But we’re continuing to inch forward into unprecedented territory.”
Even though this is an “unlikely, worst-case scenario of a prolonged default,” as Zillow economists call it, they say homeowner value would hold relatively strong. A small silver lining to this possible catastrophe.
The Zillow analysis projects that if the United States were to default on its debt, home values would begin to fall starting in August, but only by 1% from current levels through February 2024. Even in this dire scenario, home values would still be expected to rise 1% from today to the end of next year. That’s down from a current expectation of 6.5% growth over that period.
Home values tend to fall sharply when the market is flooded with listings. But in this scenario, inventory would shrink below its already historically low levels. Low inventory would keep prices from falling too far, too fast.
By Peter Anderson12 Comments – The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited August 19, 2022.
The last few years have been tough ones, with the economy going through recession, millions of people becoming unemployed and businesses going under left and right.
The economy has shown some signs of improving, but indications are we still have a lot of rough road ahead of us.
With the economy being so unsure, now is as good a time as any to start thinking about how to cut back on your regular monthly bills. For many, once you’ve cut out some of the more obvious expenditures, it doesn’t feel like there are that many other places that can be cut. The truth is, however, that most people have a lot of places that they can still cut back and save money.
Today I thought I’d look at some of the main areas of spending that people have every month – their regular monthly bills.
Often people take those monthly bills for granted, not even thinking about how they can save money on those regular expenditures, just taking it on faith that they can’t get those bills any lower.
So today’s post is all about how to save money on just about all of your regular monthly bills.
How To Save On Your Phone And Wireless Bills
There are a variety of ways that you can save on your cell phone, home phone and mobile internet charges. Here are a couple of the options that we’re using – or plan to start using in the coming year to save on our phone bills.
Landline phone service
: For years we’ve had a landline because my wife prefers talking on that versus a cell phone, and also because we needed the landline for our home security system. We recently made changes that mean we can now opt for a cheaper VOIP option for our landline service. After doing some research a lot of other bloggers are talking about the Ooma phone service, which is apparently very good. All you have to do is pay upfront to buy an Ooma Telo device for around $140, which then allows you to make unlimited calls in the U.S. for free over your existing broadband connection! All you have to pay is local taxes in your area (about $4.50 for us). You can port your current landline phone number over as well, for a $39.99 fee. Read my full review of Ooma here, and my post talking about setting Ooma up here.
Prepaid Cell Phones: One way that we’ve been saving a ton of money over the years is by using prepaid cell phone service, instead of more costly contract plans. We have no contract phone service from Republic Wireless, and we pay on average about $40/month for two phones. Both of them are Android smartphones with tons of minutes and unlimited text with 1GB/data ($20/month). The only downside is the up front cost of the cell phone – it isn’t subsidized like on contract plans. There are a variety of other low cost prepaid cell services out there that many people recommend including Tello and a Gen Mobile. Check out the related content below for a full article talking about saving on your cell phone bill using prepaid services. Want to use a traditional phone service? Check out Bill Shark, BillFixers or Rocket Money to negotiate a reduction in your monthly cell phone bills.
Low Cost Hotspots: A while ago I had a need to have Internet access on the go while traveling. At the time I settled on buying a mobile hotspot from Virgin Mobile via their prepaid wireless broadband plan. You just buy the hotspot, and then pay $35/month for 1GB of data. I was in a rush so I bought the hotspot and used it while on my trip. When I got back I became aware that there are quite a few companies that offer mobile hotspots for much lower cost, or phones and phone plans that can be used as hotspots – for much less. Do your research.
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How To Save On Your Housing Costs
One place that you can save hundreds of dollars every month is in your housing costs. Most people are aware that they could probably save by refinancing, but there are other ways you can save as well.
Refinance your mortgage: The most obvious way to save on your housing costs is simply to refinance your home mortgage. Rates are so low right now, and by refinancing you can often save hundreds of dollars off of your regular monthly payment. I’m in the middle of looking for a refinance right now, and we stand to save in the neighborhood of $200-300/month.
Appeal your property taxes: A lot of people don’t realize that you can actually appeal your property taxes in many counties by appealing the county’s tax appraisal value. I have successfully appealed our value once a couple of years ago, saving $363/year. Find out how I did it below via the related content.
Get cheaper homeowner’s insurance: I go into this more in the insurance section below, but if you shop around you can often find hundreds in savings every year just by switching insurance companies. We saved almost $1000/year by doing this just a couple of months ago.
Remove mortgage insurance: If you’re paying mortgage insurance with your regular monthly payment, and you have already reached 20% equity in your home, you may want to look into having that insurance removed by your mortgage company. It isn’t there to protect you, but the bank. Often you can have it removed after getting 20% equity in the house, and in many cases it may be required that they remove it. In some cases, if you’re a high risk borrower or if you have a FHA loan, you may need to keep the mortgage insurance longer.
Downsize your house: If you’re really trying to lower your bills a sure fire way is to downsize your house. Not only will your payment go down, but your insurance, taxes, maintenance costs and other costs will go down as well. Of course any costs associated with moving also need to be taken into account.
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How To Save On TV, Movies And Entertainment
There are a lot of ways that you can cut costs when it comes to your entertainment dollar.
Shop around and sign up for deals on premium TV: First, if you’re determined to keep your premium TV because of sports or programming only available on cable, you can at least make sure that you get the best possible deal on your cable TV package. Make sure to shop around once your introductory deal runs out and you can usually end up saving hundreds every year by switching companies! Or you can use a bill negotiation service like Bill Shark, BillFixers or Rocket Money to negotiate a reduction in your monthly bills.
Cancel un-needed services: Another thing you can do is check to make sure you’re not doubling up on any services. When we were cutting back a while ago we realized that we were paying for both Netflix streaming and Amazon Prime – which has a good video streaming option. We realized most of the same TV shows and movies were available on both sources, so we canceled Netflix – saving us $7.99/month.
Cut the cord: If you’re a bit more ambitious and aren’t very particular about receiving certain channels or waiting to see content the night it airs, you might want to make this the year that you cut the cord. Cancel your cable or satellite TV packages and move to something more affordable. Instead of paying for a TV package you can use free or low cost video streaming services like Hulu or Philo, shows streamed by the networks, and more. Use a software like Playon to stream the shows directly to your TV using an existing gaming console like the Xbox One or Playstation 4, or a cheap device like the Fire TV or Roku. The options are pretty numerous, and we’ve used options like this in the past to get most of our TV entertainment. Check out the related content below for a couple of exhaustive posts on how to set this up.
Use cheap movie rental alternatives: Don’t really watch TV or movies too much – and a monthly Netflix or Amazon subscription doesn’t make sense for you? Use a cheap rental alternative like Redbox, where you can rent a new release movie for a dollar. You can often find coupon codes to get free rentals every now and then. If you rent infrequently enough for it to matter, use cheap pay per view video options on Itunes, Amazon and Xbox to rent movies without leaving the comfort of your home. Amazon often gives away free credits on social media for their MP3 and Video stores, so follow them on Twitter and Facebook to get deals!
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How To Save On Your Internet Costs
If you’re looking to save on your internet costs, the best thing you can do, similar as with TV deals, is to shop around, or use a bill negotiation company.
Search for the best deal: Find out where you can get the best deal. For us our internet options include DSL service from a couple of different companies and cable internet. You can usually find competing deals and introductory offers that you can use to hop from company to company and always have the best deal. Other times you can bundle with other services and save. It can be a pain, but it can save you a ton of money too.
Get reduced rate internet: Another thing you can do if you live in certain areas is us a free 4G internet service. Of course to do this you’d have to live in an area with good 4G coverage.
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How To Save On Insurance
The best way to save on your insurance costs is just to shop around on a regular basis. I like to do it at least every 1-2 years for my homeowner’s insurance, auto insurance, life insurance and less often for other types. We found our best deal by using an insurance broker because they were able to compare rates at multiple companies and compare quotes for us.
Within the past few weeks we shopped around for new homeowner’s insurance after the premium skyrocketed. We ended up saving almost $1000/year when we switched our homeowner’s and auto insurance to a new company. That’s not the first time we’ve been able to do that! We did the same thing about 4 years ago, comparing rates and saving over $1000 that time!
Not sure where to start in getting quotes? Check out our insurance page to get quotes from a bunch of different companies.
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Save By Getting A Better Bank Account
You may have had your old bricks and mortar checking or savings account since you were in high school, but have been noticing lately that they’ve started charging you fees for various things. You’ve also noticed that the fees for your brokerage account have gone up, and mysterious inactivity fees started popping up. Whatever the case, people often find that their bank account is no longer useful to them, and that they can save money on fees (or make more interest) by moving somewhere else.
Save money by closing old accounts: Often old accounts start charging inactivity fees for dormant accounts, or just start charging fees because they think they can get away with it. Closing an account can be a pain, but it can also save you money (and headaches) in the long run.
Sign up for better bank accounts: Signing up for a better bank account will mean not only savings because of no fees and no minimums, but also can mean you’ll end up making more money interest, cash back and other perks. For example, a while back we Chime a great online bank. We’ve saved quite a bit in account fees that we no longer pay. Our old account at a traditional bricks and mortar was charging us fees for all sorts of things, and customer service wasn’t great. We have also switched our savings account to online banks with accounts from Capital One 360 and CIT Bank Not only are we making more in interest, but the features available at those banks surpass our old bank.
Lower interest on your credit card accounts: If the interest on your credit card is getting unreasonably high, consider closing the account after signing up for a card with a lower interest rate, 0% balance transfer and no fees. Just be wary of big charges to actually transfer balances.
Different account types to consider closing if the fees or features aren’t up to snuff? Savings accounts, checking accounts, brokerage accounts, mutual fund company accounts, credit cards. Go down the list and figure out which ones just aren’t cutting it anymore.
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How To Save On Energy Bills
Saving on energy bills often can’t be done by switching to another provider because there is often only one option for water, gas or electricity in many areas. That means the savings usually has to come from being creative and saving in other ways.
Some ways to save on your energy bills:
Get a programmable thermostat
: A good portion of your utility bills every month are going to come from your heating and cooling bills. By buying a programmable thermostat like the smart Nest thermostat, you can have your heat turned down at night, turned low when you’re gone and even control it remotely. They advertise an annual savings average of $173, so it may take about 18 months to pay back the $249 cost – unless you can find it for less. Other options include regular programmable thermostats which can run $50-70 or more.
Get (slightly) out of your comfort zone: Be willing to turn the temp down slightly in the winter, and up in the summer. You can save a ton of money just by turning the temp up or down even a few degrees!
Use a power saving device: A lot of the electronic devices we use these days have phantom power drain even when you’re not using them. Get around this by getting an auto-sensing power strip that will turn off all power when the unit is off, or energy saving power plugs that have on off switches for things like coffeemakers or toasters.
Save at your water heater: The water heater can account for 14-25% of your energy bills every year. Often the heat on your water heater is turned up higher than you need it to be. A temp of 120-140 degrees is hot enough, and every 10 degrees you lower it you’ll save 3-5% on your bill. Some experts say not to go below 120 degrees, however, because bacteria can grow in the tank. You can also save by putting a fiberglass insulating blanket on the water heater to save money on heat loss.
Get a home energy audit to find energy leaks: Local utilities will often come out to do a home energy audit free of charge or a small fee to help you find where your home is leaking energy. Plug up the leaks and save!
Maintain your appliances: Doing things like cleaning your AC condensor coils or changing furnace filters regularly can save you money on your energy. If you don’t, appliances can work harder than they need to, and drain more energy.
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Save On Bills By Negotiating Them
One way you can save money on your regular, recurring monthly bills is to negotiate them.
If you have the time to do a little research, and make a few phone calls you can often reduce your monthly bills by hundreds of dollars every year.
If you don’t have the time, there are quite a few companies that will do it for you, for a small cost.
Conclusion
So there you have it, how to save money on just about all your possible monthly bills. I could probably go on, but the point is there are no shortage of ways to save money on your regular monthly expenditures. You can save on your housing costs, your phone and wireless broadband costs, your insurance costs, your energy costs, your bank accounts and even on your spending on entertainment. You just have to be creative, find cheaper alternatives and cancel un-needed services.
So what ways to save on your regular monthly bills can you suggest? Tell us your money-saving strategies in the comments!
Inside: This guide will teach you about the different factors you need to consider when purchasing a home with a 70k salary.
There are a lot of factors to consider when you’re trying to figure out how much house you can afford. Your income, your debts, your down payment, and the interest rate on your mortgage all play a role in determining how much house you can afford.
Your situation will be different than the person next-door or your co-coworker.
Making 70000 a year is a great salary. You are making the median salary in the United States.
It’s enough to comfortably afford most homes and gives you plenty of room to save money each month.
But how much house can you actually afford?
It depends on several factors, including your down payment, interest rate, income, and credit score.
In this ultimate guide, we’ll walk you through everything you need to know about how much house you can afford making 70000 a year.
how much house can i afford on 70k
In general, you can expect to spend 28-36% of your income on housing.
Generally speaking, if you make $70,000 a year, you can afford a house between $226,000 and $380,000.
How much mortgage on 70k salary?
In general, you should expect to spend no more than 28% of your monthly income on a mortgage payment.
Thus, you can spend approximately$1633-2100 a month on a mortgage.
Just remember this is relative to the interest rate, term length of the loan, down payment, and other factors.
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28/36 Rule
But there’s one factor that trumps all the others: The 28/36 rule.
Also known as the debt-to-income (DTI) ratio.
The 28/36 rule is a guideline that says that your housing costs (mortgage payments, property taxes, homeowners insurance, and HOA fees) should not exceed 28% of your gross monthly income.
And your total debt (housing costs plus any other debts you have, like car payments or credit card bills) should not exceed 36% of your gross monthly income.
You must follow the 28/36 rule.
How to calculate how much mortgage you can afford?
If you’re like most people, you probably don’t know how to calculate how much mortgage you can afford.
This is actually a really important question that you need to ask yourself before beginning the home-buying process.
The answer will help determine the price range of homes you should be looking at. Plus know how much money you’ll need to save for a down payment.
Step #1: Check Interest Rates
Research current mortgage rates to get an accurate estimate. You can also check your credit score and search for average mortgage rates based on your credit score.
Right now, with sky-high inflation, you are unable to afford a bigger house when interest rates are hovering around 6% compared to ultra-low interest rates of 2.5%.
With a 70k salary, this can be the difference between $50-100k on the total mortgage amount you can afford.
Step #2: Use a Mortgage Calculator
Use a mortgage calculator to get an estimate of the home price you can afford based on your income, debt profile, and down payment.
Generally, lenders cap the maximum amount of monthly gross income you can use toward the loan’s principal and interest payment to not more than 28% of your gross monthly income (called the “Front-End” or “Housing Expense” ratio). Then, limit your total allowable debt-to-income ratio (called the “Back-End” ratio) to not more than 36%.
You can use a mortgage calculator to a ballpark range of what house you can afford.
Step #3: Taxes, Insurance, and PMI
When planning for a home purchase, it’s important to factor in all of your monthly expenses, including taxes, insurance, and PMI.
This will ensure that you get an accurate estimate of your home-buying budget based on your household annual income.
Don’t forget to include these payments to get a realistic understanding of your monthly budget.
Step #4: Remember your Living Expenses
When considering how much house you can afford based on your $70,000 salary, you must consider your lifestyle and current expenses.
It is important to factor in other monthly expenses such as cell phone and internet bills, utilities, insurance costs, and other bills.
More than likely, you will be approved for a higher mortgage amount than you would feel comfortable with. This is 100% what lenders will do.
They want to provide you with the most you can afford – not what you should afford.
Step #5: Get prequalified
Prequalifying for a mortgage is an important first step to take when estimating how much house you can afford.
It gives you a more precise figure to work with and helps you make a more informed decision based on your personal situation.
Remember that your final amount will vary depending on a number of factors, especially your interest rate, which will be based on your credit score.
Taking the time to research current mortgage rates helps you secure a better mortgage rate, giving you more buying power.
Home Buying by Down Payment
How much house can you afford?
It’s a common question among home buyers — especially first-time home buyers. Use this table to figure out how much house you can reasonably afford given your salary and other monthly obligations.
The assumption is 30 year fixed mortgage, good credit (690-719), no monthly debt, and a 4% interest rate.
Annual Income
Downpayment
Monthly Payment
How Much House Can I Afford?
$70,000
$9,552 (3%)
$1,750
$318,412
$70,000
$16,215 (5%)
$1,750
$324,316
$70,000
$34,058 (10%)
$1,750
$340,581
$70,000
$53,573 (15%)
$1,750
$357,152
$70,000
$75,094 (20%)
$1,750
$375,468
$70,000
$98,933 (25%)
$1,750
$395,731
**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.
Mortgage on 70k Salary Based on Monthly Payment and Interest Rate
How much house can you afford on a $70,000 salary?
This largely depends on the current interest rate of the mortgage loan you’re considering. When interest rates are high, people aren’t actively buying as when interest rates are low.
By understanding these factors, you can better gauge how much house you can afford on a $70,000 salary.
The assumption is 30 year fixed mortgage, good credit (690-719), no monthly debt, and a 20% downpayment.
Annual Income
Monthly Payment
Interest Rate
How Much House Can I Afford?
$70,000
$1,750
3.25%
$406,796
$70,000
$1,750
3.5%
$396,231
$70,000
$1,750
3.75%
$386,101
$70,000
$1,750
4%
$375,994
$70,000
$1,750
4.5%
$357,554
$70,000
$1,750
5%
$339,954
**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.
Home Affordability Calculator by Debt-to-Income Ratio
Around here at Money Bliss, we always stress that debt will hold you back.
In the case of buying a house, debt increases your DTI ratio.
Here is a glimpse at what monthly debt can cause your debt-to-income (DTI) ratio to increase. Thus, making the house you want to buy to be more difficult.
Annual Income
Monthly Payment
Monthly Debt
How Much House Can I Afford?
$70,000
$2,100
$0
$440,085
$70,000
$1,900
$200
$404,584
$70,000
$1,800
$300
$382,334
$70,000
$1,600
$500
$337,883
$70,000
$1,350
$750
$282,208
$70,000
$1,100
$1000
$226,582
**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.
Increase your Home Buying Budget
Here are a few ways you can increase your home buying budget when buying a house on a $70k annual income.
By following these steps, you can increase your home buying budget and find a more suitable house for your income.
1. Pick a Cheaper Home
Home prices vary significantly in different parts of the country.
Moving out of a major metropolitan area with notoriously high housing costs can help you find more affordable homes.
There are plenty of ways to find a home that is cheaper than you would normally expect.
Look for homes that are for sale in less desirable neighborhoods.
Find homes that are for sale by owner or have not been listed yet.
Check for homes that are for sale outside of your usual price range and haven’t sold as they may drop their price.
Move to a lower cost of living area.
2. Increase Your Down Payment Savings
A larger down payment can reduce the amount you have to finance, which lowers your monthly payment.
Plus help you get a lower interest rate and avoid paying PMI.
Putting down at least 10-20 percent of the home sale price can help boost your home buying power. You can also take advantage of down payment assistance programs in your area.
3. Pay Down Your Existing Debt
Paying down your debts such as credit card debts or auto loans can help raise your maximum home loan.
Paying down your debts can help you qualify for a higher loan amount.
This is because when you have lower amounts of debt, your credit score is higher and your debt-to-income ratio is less. This means you are less likely to be rejected for a home loan.
4. Improve Your Credit Score
A higher credit score can lead to lower rates and more affordable payments.
You can improve your credit score by:
Paying your bills on time
Paying down your credit card balances
Avoiding opening new credit before applying for a mortgage
Disputing any errors on your credit report
This is very true! We had an unfortunate debt that wasn’t ours added to our credit report right before closing. While the debt was an error, it still cost us a higher interest rate and forced us to refinance once the credit report was fixed.
5. Increase Your Income
Asking for a raise, seeking a higher-paid position, or starting a side gig can help you increase the amount of home you can afford.
While you need two years of income from a side gig or your own online business to count as income, the extra cash earned helps you to increase the size of your downpayment. Plus it lowers your debt-to-income ratio with the savings you are setting aside.
What factors should you consider when deciding how much you can afford for a mortgage?
How much house can you afford on your current salary and with your current monthly debts?
This is a question that we are often asked, and it’s one that we love to answer.
We’ll walk you through all the different factors that go into this decision so that you can make an informed choice.
1. Loan amount
The loan amount is a key factor that affects the total cost of a mortgage.
If you have no outstanding debt, a 20% down payment, a high credit score, and a 3.5% interest rate from an FHA loan, you could be able to afford up to $508,000.
However, if you have debt, a smaller down payment, or a lower credit score, the loan amount you can qualify for will be lower.
Similarly, if you choose a 15-year fixed-rate loan, your monthly payments will be higher, but you will end up paying less in interest over the life of the loan than with a 30-year fixed-rate loan.
Ultimately, your loan amount will affect the total cost of your mortgage, so it’s important to consider all the factors when making your decision.
2. Mortgage Interest rate
Mortgage interest rates can have a significant impact on the cost of a mortgage. The higher the interest rate, the more expensive the loan will be.
For example, a difference between a 3% and 4% interest rate on a $300,000 mortgage is more than $150 on the monthly payment.
Remember, in the first few years of a mortgage, the majority of the payment goes toward interest rather than trying to reduce the principal amount.
3. Type of Mortgage
The primary difference between a fixed and variable mortgage is the interest rate and the amount of your payment
Fixed-rate mortgages offer the stability of having the same interest rate for the life of the loan.
Adjustable-rate mortgages (ARMs) come with lower interest rates to start, but those rates can change over the life of the loan. ARMs are often a riskier choice, as if the economy falters, the interest rate can go up.
Fixed-rate loans are typically the most popular choice, as the monthly payment amount is more predictable and easier to budget for. The terms of a fixed-rate loan can range from 10 to 30 years, depending on the lender.
Adjustable-rate mortgages (ARMs) have interest rates that can increase or decrease annually based on an index plus a margin. ARMs are typically more attractive to borrowers who plan on staying in the home for a shorter period of time, as the lower initial interest rate can make the payments more manageable.
The Money Bliss recommendation is to choose a 15-year fixed-rate mortgage.
4. Property value
Property value can have a direct effect on how much you can afford for a mortgage.
As the value of the property increases, so does the amount of money you will need to borrow to purchase it. This, in turn, affects the monthly payments and the amount of interest you will pay over the life of the loan.
This is especially important as many people have been priced out of the market with the rising home prices.
Additionally, higher property values can mean higher taxes, which will add to the amount you need to budget for your mortgage payments.
5. Homeowner insurance
Homeowner’s insurance is a requirement when securing a loan and it can vary depending on the value and location of the home.
Additionally, certain areas that are prone to natural disasters or are located in densely populated areas may have higher premiums than other locations and may require additional insurance like flood insurance.
As a result, lenders typically require that you purchase homeowners insurance in order to secure a loan, and may have specific requirements for the type or amount of coverage that you need to purchase.
Before committing to a mortgage, it is important to consider the cost of homeowner’s insurance and make sure it fits into your budget.
This is something you do not want to skimp on as the cost to replace a home is very expensive.
6. Property taxes
Property taxes are calculated based on the value of a home and the tax rate of the city or county where the property resides.
The higher the property taxes, the more you will have to pay in your monthly mortgage payment.
In states with high property taxes, the property tax bill can be a large sum of the mortgage payment.
It is important to consider these costs when comparing different homes and locations to ensure you can afford the home without stretching your budget too thin.
7. Home repairs and maintenance
It’s important to also consider other factors such as the age of the house, since some properties may require renovation and repairs that can cost more than the house price itself.
Beyond the cost of purchasing a home, homeowners will likely have other expenses related to owning and maintaining the property.
Also, many homeowners prefer to do significant upgrades to the home before moving in, which comes at an additional expense.
These can include ordinary expenses such as painting, taking care of a lawn, fixing appliances, and cleaning living spaces, which can add up.
Additionally, it’s advisable to buy a home that falls in the middle of your price range to ensure you have some extra money for unexpected costs, such as repairs and maintenance.
8. HOA or Homeowners Association Maintenance
This is often an overlooked factor by many new homebuyers, but extremely important as some HOAs add $500-800 per month to the total housing budget.
The purpose of a homeowners association (HOA) is to establish a set of rules and regulations for residents to follow as well as maintain the community or building.
These fees are typically used to pay for maintenance, amenities, landscaping, and concierge services.
HOA fees are used to finance community upkeep, including landscaping and joint space development, and can range from $100 to over $1,000 per month, depending on the amenities in the association.
9. Utility bills
When switching from renting to buying a home, you will have to factor in the costs of your monthly utility bills such as electricity, natural gas, water, garbage and recycling, cable TV, internet, and cell phone when calculating how much mortgage you can afford.
In addition, the larger the home, the higher the costs to heat and cool your new home.
Make sure to ask your realtor for previous utility bills on the property you are interested in.
10. Private Mortgage Insurance
The purpose of private mortgage insurance (PMI) is to protect the lender in the event of foreclosure. It is typically required when a borrower is unable to make a 20% down payment on a home purchase.
PMI allows borrowers to purchase a home with less upfront capital, but also comes with additional monthly costs that are added to the mortgage payment. These fees range from 0.5% to 2.5% of the loan’s value annually and are based on the amount of money put down.
PMI can also be canceled or refinanced once the borrower has achieved 20% equity in the home or when the outstanding loan amount reaches 80% of the home’s purchase price.
11. Moving costs
Moving is expensive, but also a pain to do. So, consider the moving costs associated with relocating from one location to another.
Typically fees for packing, transportation, and possibly storage, and can vary depending on the size of the move and the distance the move needs to cover.
Also, consider if by buying a home, you will stop having moving costs associated with moving from rental to rental.
FAQ
When determining how much house you can afford, it’s important to consider several factors.
These include your income, existing debts, interest rates, credit history, credit score, monthly debt, monthly expenses, utilities, groceries, down payment, loan options (such as FHA or VA loans), and location (which affects the interest rate and property tax). Also, think about the costs of maintaining or renovating a home.
Additionally, you should also evaluate your own budget and assess whether now is the right time to purchase a home. Taking all of these factors into account can help you set the maximum limit on what you can realistically afford.
A mortgage calculator can help you determine your home affordability by providing an estimate of the home price you can afford based on your income, debt profile, and down payment.
It works by inputting your annual income and estimated mortgage rate, which then calculates the maximum amount of money you’re able to spend on a house and the expected monthly payment.
Additionally, different methods are available to factor in your debt-to-income ratio or your proposed housing budget, allowing you to get a more accurate estimate of your home buying budget.
The debt-to-income ratio or DTI is used by lenders to assess a borrower’s ability to make mortgage payments.
This ratio is calculated by taking the total of all of a borrower’s monthly recurring debts (including mortgage payments) and dividing it by the borrower’s monthly pre-tax household income.
A high DTI ratio indicates that the borrower’s debt is high relative to income, and could reduce the amount of loan they are qualified to receive.
Generally, lenders prefer a DTI of 36% or less, which allows borrowers to qualify for better interest rates on their mortgages.
To calculate their DTI, borrowers should include debt such as credit card payments, car loans, student and other loans, along with housing expenses. It is important to note that the DTI does not include other monthly expenses such as groceries, gas, or current rent payments.
Closing costs can have an enormous impact on how much home you’re able to afford.
From application fees and down payments to attorney costs and credit report fees, these costs can add up quickly and affect your overall budget. Unfortunately, most of these closing costs are non-negotiable, but you can ask the seller to pay them.
When buying a house, it is important to research the different mortgage options available to you.
You can typically choose between a conventional loan that is guaranteed by a private lender or banking institution, or a government-backed loan. Depending on your monthly payment and down payment availability, you may be able to select between a 15-year or a 30-year loan.
A conventional loan typically offers better interest rates and payment flexibility.
While a government-backed loan may be more lenient with its credit and down payment requirements.
For veterans or first-time home buyers, there may be special mortgage options available to them.
Ultimately, it is important to talk to a lender to see which loan type is best for your personal circumstances.
When it comes to saving for a down payment, it’s important to understand how much you’ll need and how much it will affect your budget.
Generally, you’ll need 20% of the cost of the home for a conventional mortgage and 25% for an investment property. When you put down more money, it gives you more buying power and may help you negotiate a lower interest rate.
For example, if you’re buying a $300,000 house, you’ll need a down payment of $60,000 for a conventional mortgage. On the other hand, if you put down 10%, you can still afford a $395,557 house. But, you will have to pay for private mortgage insurance.
In addition, there are other ways to help you cover these upfront costs. You can look into down payment assistance programs.
Ultimately, the size of your down payment will depend on your budget and financial goals. You should never deplete your savings account just to make a larger down payment. It’s important to factor in emergency funds and other expenses when deciding on the best option.
Eligibility requirements for loan lenders can vary, but in general, lenders are looking for borrowers with a good credit score, a reliable income, and a history of employment or income stability.
For most loan types, borrowers will need to show a history of two consecutive years of employment in order to qualify. However, lenders may be more flexible if the borrower is just beginning their career or if they are self-employed and do not have W2 forms and official pay stubs.
Income verification also needs to be done “on paper”, meaning that cash tips that do not appear on pay stubs or W2s can not be used as income. The lender will look at the household’s average pre-tax income over a two-year period before determining the amount that can be borrowed.
In order to make sure that the borrower is financially secure, lenders will also pull the borrower’s credit report and base their pre-approval on the credit score and debt-to-income ratio. Employment verification may also be done.
For certain government-backed loan types, such as FHA, VA, and USDA loans, there may be additional or different requirements for eligibility. For instance, for FHA loans, the borrower must intend to use the home as a primary residence and live in it within two months after closing. VA loans are more lenient, and may not require a down payment.
The qualifications for VA loans vary based on the period and amount of time the borrower has served. There are many ways to qualify, whether the borrower is a veteran, active duty service member, reservist, or member of the National Guard. For more information on eligibility requirements for VA loans, borrowers can visit the U.S. Department of Veteran Affairs.
A good credit score will mean you have access to more lending options, better interest rates, and more purchasing power.
On the other hand, a poor credit score could mean you are approved for a loan, but at a higher interest rate and with a smaller house.
This means your budget will be more limited and you may not be able to buy as much home as you had hoped for. Additionally, lenders will also look at other factors, such as your debt-to-income ratio, employment history, and loan term, in order to determine your overall affordability.
What House Can I Afford on 70k a year?
As a borrower, you need to consider the interest rate, down payment, credit score, debt-to-income ratio, employment history, and loan term when determining how much house you can afford.
A higher credit score can often mean a lower interest rate, and a larger down payment can bring down the monthly payments.
All of these factors can have an effect on the amount of money you can borrow and the home you can afford.
Ultimately, understanding the impact of different factors can help borrowers make the best decisions when it comes to getting a mortgage.
Now that you know how much house you can afford, it’s time to start saving for a down payment.
The sooner you start saving, the sooner you’ll be able to move into your dream home. But you may have to wait if you are considering a mansion.
By taking into consideration this guide into account, you can make a more informed decision about the cost of a mortgage for your new home.
Know someone else that needs this, too? Then, please share!!
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Rent control apartments can be rented by anyone, and the rent increases are usually low and predictable. This is because the annual adjustment is based on the Consumer Price Index CPI plus somewhere between 2%-10% of your rent. The combination of CPI + the % increase can never exceed 10% total. The law also sets that the landlord may only increase your rent once in any 12-month period. So, if in 2022 your rent was $1500 upon your anniversary/lease renewal, your rent could have a maximum increase of $93. Because the CPI was 4.2% and the city allowed an additional 2% increase, your rent would be $1593 upon renewal.
We wrote a whole blog about it it if you want to Read more…
Or if you want, just check out the rent control buildings below and score yourself some new digs!
One of the worst things about renting is the inevitable rent increases that you get every year. But don’t worry, there are ways to combat the impact of those rent increases – like finding a rent controlled apartment!
Rent control apartments have a cap on how much your rent can be increased each year, so it’s a great way to avoid sticker shock when your lease comes up for renewal. How rent increases are calculated can be a little tricky, but we’ve got all the details right here. So if you’re looking for some peace of mind when it comes to your monthly housing costs, take a look at our list of Washington, DC rent control apartments below.
1673 Columbia Road, NW Washington, DC 20009
Simple elegance. The best things in life don’t have to be bragged about. They can be simply appreciated each time you arrive home. The Calverton Apartments are in in the heart of the Adams Morgan neighborhood of Washington, DC. An array of restaurants and grocery options are within minutes of your apartment. Inside, you’ll find updated kitchens with energy efficient appliances, grand living rooms and large windows for natural light to pour in. Whether you choose to rent a studio, one-bedroom or two-bedroom apartment, you will be treated to beautiful hardwood floors and ample closet space. This is thoughtful living.
Hilltop House
1475 Euclid St NW Washington, DC 20009
Hilltop House is a hidden jewel of the Adams Morgan neighborhood. This community offers studio and one-bedroom apartments for rent. Each apartment has large windows and breakfast bars; creating a cheerful, open, and bright atmosphere. To keep apartment living and budgeting easy, all utilities are included with your rent. Hilltop House faces Meridian Hill Park, where residents may take in a variety of social and cultural events. Every Sunday the park is activate with kickball leagues, yoga classes, Frisbee sessions, and drum circles. Just a couple of blocks from the Hilltop House apartment community is the Columbia Heights Metro station with access to both the green and yellow like. Hilltop House Apartments have the perfect location to take in all that Washington, DC has to offer.
Meridian Park Apartments
2445 15th Street, NW Washington, DC 20009
Enhance your interaction with your home and its surroundings. Meridian Park offers spacious and affordable studios, one and two bedrooms apartment homes for rent. Featuring updated kitchens with stainless steel appliances, new cabinets, and countertops. The neighborhood is comprised of iconic Meridian Hill Park on its western boundary, booming 14th Street Corridor in the neighborhood’s core, legendary U Street corridor to the south, and row house lined streets lined in-between. Meridian Park is just a quick walk from the Columbia Heights Metro station. Your key to the city is here.
Clarence House Apartments
4530 Connecticut Ave NW Washington, DC 20008
Looking for a studio, one or two-bedroom apartment? Want to be walking distance to the metro, the Giant, Whole Foods, pharmacies, dry cleaners, restaurants, shopping, and great schools? Start your apartment search at Clarence House apartments! Living here means having access to all of our neighborhood’s hidden gems. Stroll to a concert at the Austrian Embassy, enroll in a music class at the Levine School; become a regular at the iconic bookstore Politics and Prose or visit the Hillwood Museum.
4550 Connecticut Ave NW Washington, DC 20008
The Frontenac is nestled in the heart of elegant upper-Northwest. The Frontenac boasts spacious apartments with updated kitchens and bathrooms. Its classic architectural style, evident in our grand lobby’s high ceiling and in our apartment units’, arched doorways and traditional wainscoting, attracts tours of local art history students.You can meet your neighbors or take advantage of WiFi on the Frontenac’s peaceful roof deck or in its spacious laundry room. Take a stroll to the Van Ness metro station, Giant, Whole Foods, pharmacies, dry cleaners, restaurants, shopping, and great schools for students of all ages. Our neighborhood is full of hidden gems..
Sherry Hall Apartments
2702 Wisconsin Ave NW Washington, DC 20007
Located on one of DC ‘s primary arteries, Sherry Hall is nestled in Glover Park between Georgetown and Cleveland Park. Many of Wisconsin Avenue’s most popular restaurants are within walking distance. Inside your apartment home, beautiful hardwood floors, brand new kitchens, and large windows enhance and brighten your living space. New kitchens are equipped with stainless steel appliances including a gas range, granite counter tops, and light wood shaker cabinets. All utilities are included so you know exactly what your monthly expenses will be: no surprises, no math!
2800 Woodley
2800 Woodley Ave NW Washington, DC 20008
At 2800 Woodley, you’ll find large and varied floor plans, all of which include abundant closet space, central air and beautiful hardwood floors. Unique features, such as huge windows and a secretarial desk, lend a sense of charm to your new home. The building is situated on a quiet side-street, yet it lies only steps from the heart of Woodley Park. Some of D.C.’s most popular restaurants and trendy shops are within easy walking distance. Or, if you can’t find what you’re in the mood for at home, hop on the Metro and explore the city. The Woodley Park Metro station is only two blocks away. 2800 Woodley is city living made easy.
Naylor Overlook
2633 Naylor Road, SE Washington, DC 20020
Completely renovated one, two, & three bedroom apartments and duplexes for rent. These spacious floor plans feature stainless steel appliances, microwave, dishwasher, lots of cabinet space, ample closet space, brand new bathrooms, and hardwood flooring. Located in the Randle Heights area of Southeast you have the city in the palm of your hand. Take advantage of having grocery stores, restaurants, clothing stores, pharmacies, nail and hair salons in close proximity. You ‘ll never have to leave your neighborhood!
Wakefield Hall
2101 New Hampshire Ave NW Washington, DC 20009
Wakefield Hall’s decorative facade gives way to just as beautiful apartments. Hardwood floors, updated kitchens, and walk-in closets create a charming and comfortable living space. Wakefield Hall is located near U St./Cardozo Metro Station, giving you access to all DC has to offer via the yellow and green lines. You can step out your front door and experience the cultural vibes within your neighborhood.
The Shawmut
2200 19th Street NW Washington, DC 20009
Classic style and modern amenities are the perfect combinations to make you feel right at home. This pet-friendly building in the heart of Adams Morgan, just across the street from Kalorama Park, creates a comfortable living space for all. The Shawmut’s elegant, New York-style exterior gives way to beautiful one and two-bedroom apartments featuring hardwood floors, 9′ ceilings, and updated kitchens.Step outside and you are in the heart of a vibrant, thriving community. From the bustling 18th St Corridor down to Dupont Circle, you are never far from the energy of Downtown DC. Want to get away? The L2, 42, 43, and H1 bus lines are right outside your front door with direct connections to the Green, Red, and Yellow metro lines.
1380 Fort Stevens Apartments
1380 Fort Stevens Drive, NW Washington, DC 20011
Located in the Brightwood neighborhood, 1380 Ft. Stevens boast comfort and affordability. Spacious one and two bedrooms apartment homes with updated kitchens and baths. Less than a five minute walk from your front door you can find over 15 casual dining options including Julia’s Empanadas, Serengeti Restaurant, and Sabor Restaurant. When it’s time to head to the grocery, Safeway is only .4 of a mile down the road. Commuting is a breeze with bus routes 52, 53, 54, E2, E3, E4, S1, S2, and S4 stopping right outside the property.
1400 Van Buren Apartments
1400 Van Buren NW Washington, DC 20014
Located in the Brightwood neighborhood of Washington, DC, you’ll find this charming brick building offering spacious one and two-bedroom apartments. Less than a ten-minute walk from 1400 Van Buren’s front door you can find over 15 casual dining options including Julia’s Empanadas, Serengeti Restaurant, and Haydee’s Restaurant. When it’s time to head to the grocery, Safeway is only .4 of a mile down the road. Commuting is a breeze with bus routes 52, 53, 54, S2, and S4 stopping right outside the property. The Takoma Metro station is just under a mile away.
Penn View Apartments
2515 R Street, SE Washington, DC 20020
Design cannot be defined by one component but rather the artful intersection of style and function. Located just minutes away from Capitol Hill, Penn View apartments offer affordable efficiencies, one, and two-bedroom apartment homes for rent. Penn View’s luxurious kitchens and functional floor plans are just a few of the features you’ll find at this community. Quality is always on trend.
Eddystone Apartments
1301 Vermont Avenue, NW Washington, DC 20005
Logan Circle and the 14th Street corridor are becoming the homes of some of DC’s most exciting new restaurants. Live one block away from the excitement at the Eddystone apartments in Logan Circle. The impeccably maintained community has a reputation for top quality service. Combine that with gorgeous efficiencies boasting sunrooms, stellar views and huge walk-in closets and you have your ideal new home. Close to the action…far from ordinary.
Hillside Terrace Apartments
1812 23rd Street, SE Washington, DC 20020
Looking for an apartment to rent, but want to live in a quiet neighborhood? Fall in love with Hillside Terrace. Our apartment community is nestled in the tranquil neighborhood of Randle Highlands. Randle Highlands is best known as a small residential neighborhood in Southeast Washington, DC. Hillside Terrace’s garden-style apartment buildings are charmingly situated on professionally landscaped grounds. The studio, one, and two bedroom apartments feature updated kitchens and baths, as well as ample closet space and some of the utilities are included with the rent. The Hillside Terrace community is just a short car trip from all of downtown Washington, DC’s entertainment and shopping.
1818 Riggs Place
1818 Riggs Place, NW Washington, DC 20009
Built-in 1920 1818 Riggs Place is nestled off the beaten path but yet it’s in the heart of Dupont and all it has to offer. 1818 Riggs boasts hardwood flooring, open floor plans, and walk-in closets. 1818 Riggs truly is a walker’s paradise with countless dining options, everything from Five Guys to Thaiphoon and Lauriol Plaza right at your doorstep. The Dupont Circle Metro station only steps away as are the following bus routes 42, 43, H1, L1, and L2. 1818 Riggs, Dupont Circle’s hidden gem is your gateway to all of Washington, D.C.
Chatham Courts Apartments
1707 Columbia Road, NW Washington, DC 20009
Feel the pulse of the city in the center of Adams Morgan, outside the hustle and bustle of the thriving city awaits. Inside Chatham Courts find a quiet serenity from the moment you come in the front door, you will know you’ve found somewhere special. At Chatham Court, you will find apartments with spacious closets, remodeled kitchens, high ceilings, over sized floor plans, and hardwood floors that make a dramatic impression. The building is conveniently located within easy walking distance to the heart of Adams Morgan.
Cortland Apartments
1760 Euclid St, NW Washington, DC 20009
Come to the Cortland Apartments in Adams Morgan; you’ll find your choice of affordable studio, one-bedroom, and two bedroom apartments for rent in Washington, DC. These large apartments in one of Washington, DC’s most popular neighborhoods, offer multiple closets, foyers, beautiful hardwood floors, and large windows to welcome in natural light. The building is conveniently located one block from a Safeway grocery store, Starbucks, and countless dining options. In addition to Adams Morgan’s active social scene, The Cortland’s location is enhanced by its convenience. Living here means you are within walking distance of Dupont Circle, Woodley Park, and U Street metro.
Looking for something different? Search available apartments in the Washington, DC area now.
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Amazon and the Amazon logo are trademarks of Amazon.com, Inc, or its affiliates. Rental providers will not refuse to rent a rental unit to a person because the person will provide the rental payment, in whole or in part, through a voucher for rental housing assistance provided by the District or federal government.
For the past six weeks, I’ve been hard at work writing my “introduction to financial independence and early retirement” project for Audible and The Great Courses. It’s been challenging — and fun — to rework my past material for a new audience in a new format.
Naturally, I’m emphasizing two important points in this project: profit and purpose.
I believe strongly that you need a clear personal mission statement in order to find success with money (and life).
I also believe that the most important number on your path to financial freedom is your personal profit, the difference between your income and your spending. (Most people refer to this number as saving rate. I prefer the term “personal profit” because it’s, well, sexier.)
That last point is important.
Too many people want magic bullets. They want quick and easy ways to get out of debt and build wealth. They believe (or hope) that there’s some sort of secret they can uncover, that somehow they’ve missed. Well, there aren’t any secrets. Money mastery is a combination of psychology and math. And the math part is so simple a third-grader could understand it. Wealth is the accumulation of what you earn minus what you spend.
There are only two sides to this wealth equation — earning and spending — but a disproportionate amount of financial advice focuses on the one factor, on spending, and that’s too bad. Sure, frugality is an important part of personal finance. And if you’re in a tight spot and/or have a high income and still struggle, then cutting expenses is an excellent choice. But the reality is, you won’t get rich — slowly or otherwise — by pinching pennies alone.
The Biggest Lie in Personal Finance
Recently at his excellent blog, Of Dollars and Data, Nick Maggiulli wrote about the biggest lie in personal finance. What is that lie? He writes:
While there are lots of people who are in financial trouble because of their own actions, there are also lots of people with good financial habits who just don’t have sufficient income to improve their finances.
That’s why the biggest lie in personal finance is that you can be rich if you just cut your spending. And the financial media feeds this lie by telling you to stop spending $5 a day on coffee so that you can become a millionaire.
With charts and graphs and data, Maggiuli demonstrates that the problem facing people with low incomes isn’t their spending — it’s their earning. If you’re living at the poverty line — currently $26,200 per year for an American family of four — you’re not going to escape through thrift. Thrift is an emergency measure, a stopgap. It’s a bandage on a major wound.
Here’s the bottom line:
If you’re poor and hope to be not poor, your attention should be focused on increasing income, not on cutting costs. Your expenses are likely already very low.
If you have an average household income — currently $63,179 according to the U.S. Census Bureau — your path to building wealth will probably include both frugality and income enhancement.
If you have a high income but still struggle to make ends meet, your attention should absolutely turn to cutting costs. You need to rein in your lifestyle. But you won’t accomplish this with frugality; you’ll do this by optimizing the big stuff.
Maggiuli is fed up with the Biggest Lie. It “triggers” him.
“This is the same financial media who write stories about how people save money by living in a trailer, making their own dish soap, or reusing their dental floss,” he writes. “Yes, it’s that ridiculous. But what really gets me is how these examples are provided as ‘proof’ of how cutting spending can make you rich.”
From my experience, this sort of stuff is perennially popular because it’s easy. It’s easy to write and it’s easy to read, even if it doesn’t offer any real solutions. It’s more difficult to write about boosting your income. And, it’s more difficult to act on that information because it takes time, effort, and actual sacrifice.
Real-Life Examples of the Biggest Lie in Action
Just this morning, Trent at The Simple Dollar published an article about optimizing dishwashing for money and time. Trent writes:
If I can invest some time and thought and effort into optimizing a routine I do three times a week, and that optimization trims off five minutes of effort and $0.50 in cost, I’m literally saving 13 hours per year and $78 per year for the rest of my life.
Trent isn’t wrong. If his math is correct (and his discipline too), he will literally save 13 hours and $78 each year by optimizing how he does dishes. This isn’t a lie. In this case, the lie comes from what is implied: Do this and you’ll grow rich. You’ll reach financial freedom by becoming a smarter dishwasher.
Here’s the truth: You don’t reap the thirteen hours and $78 annual benefit as a one-time win. You’re saving five minutes and fifty cents per day. This may seem like a niggling point, but it’s important. If you gain thirteen hours or $78 at once, that’s something real and tangible, something you can work with. But an extra five minutes and fifty cents per day? Not so much.
I’m not saying that you shouldn’t optimize your dishwashing routine. Do it! But don’t expect it to make you rich. Because it won’t.
Here’s a bigger example of the lie in action.
Elizabeth Willard Thames writes at Frugalwoods, which is one of my favorite money blogs. Recently, especially, Liz has been publishing lots of amazing stuff. I look forward to each new article. (Those of you who make use of the Spare Change list of links on the GRS front page have probably noticed that I bookmark Frugalwoods frequently.)
As you might guess from the name of her blog, Liz focuses (almost?) exclusively on thrift. She and her husband practice extreme frugality. She wrote a book, Meet the Frugalwoods [my review], that documented their journey from poor college students to achieving financial independence on a 66-acre farm in central Vermont.
Now, there’s no doubt that Liz and Nate are thrifty. They practice what they preach. But their frugality is not the reason for their wealth, the reason they were able to retire early. You can’t buy a 66-acre farm in Vermont simply by optimizing your dishwashing routine. Or clipping coupons. Or hosting potlucks. To do this, you also need a high income. And that’s a part of the story that Liz doesn’t share with her readers. She and her husband made a lot of money, and that’s how they got rich — not through frugality.
I’m sure Liz doesn’t mean to obfuscate the truth, but that’s the net effect. She’s complicit in “the biggest lie in personal finance”.
To her credit, Liz seems to be incorporating more of the truth in her writing. Today, for instance, the About page at Frugalwoods acknowledges their high incomes. This didn’t used to be the case.
Now, I don’t mean to dog on Liz and Trent. They’re both good people and fine writers. But I think they do their readers a huge disservice by covering just one aspect of the wealth equation, by rarely (if ever) mentioning income. They’re active participants in Maggiuli’s “biggest lie”.
And I’ll confess: For a long time, I was guilty of the same thing. Sometimes, I still am. Hell, I’ve spilled a lot of words lately about my quest to optimize my food spending, haven’t I? I’m not claiming to be any better than Liz or Trent. But I want to at least acknowledge the lie — and the reciprocal truth.
The Biggest Truth in Personal Finance
If frugality isn’t the path to riches, what is? The answer is simple: Big Wins. Big Wins are the quickest way to wealth.
You can scrape your dishes and rinse them in cold water every day for the rest of your life, and you still wouldn’t match the benefits you’d obtain by purchasing a cheaper home. Or choosing a more fuel-efficient car. Or negotiating your salary.
The best way to spend less is to cut back on the big stuff.
If the average American family were to trim their housing costs by 10%, they’d save roughly $150 per housing payment — more than twenty times the benefit of optimizing your dishwashing routine. Transportation offers similar opportunities. According to the American Automobile Association, the average driver spends just over $9000 per year on her vehicle. Reduce this spending by less than one percent and you’ve accomplished the same thing as a year of diligent dishwashing.
But, as Maggiuli notes in his article, income is the elephant in the room, the subject that too many writers ignore.
You can only cut costs so far. There’s no way to reduce your spending below zero, and most of us can’t come close to that. As I mentioned earlier, the U.S. poverty line for a family of four is currently $26,200. (For two people, it’s $17,240.) Not counting his business, Mr. Money Mustache (a famously frugal fellow) spent $13,068 in 2019.
If you’re living like this and want to escape, you shouldn’t look for ways to cut costs. That stuff is useless to you. If somebody tells you otherwise, they’re lying. In these circumstances, you should be trying to increase your income. And even if you have a standard middle-class salary, boosting income is usually the best way to meet your goals.
There are three primary ways to earn more money.
First, become better educated. Despite the dire details in the gloomy mass media, one fact is undeniable: The more you learn, the more you earn. In the U.S., education has a greater impact on lifetime earnings than any other demographic factor. It’s more important than your race, your religion, your gender, your location. (In fact, the Census Bureau says education has five times the impact of gender on annual earnings.) That’s great news because while you can’t control your age or race, you have total control over your education.
Second, become a better employee. I read a lot on Reddit (and other places) where people piss on their employers, complaining about how their boss (or company) is out to screw them. This stuff is counter-productive. Sure, there are some shitty employers out there, but most are happy to promote and reward their best workers. If you want to earn more, work longer and harder than others will. If you’re in a situation where hard work goes unrewarded, switch jobs.
Finally — and most importantly — learn to negotiate your salary. Study after study shows the same thing: Failing to negotiate your salary can cost you over half a million dollars during the course of a typical career. Half a million dollars! For over a decade, I’ve been pushing Jack Chapman’s book, Negotiating Your Salary: How to Make $1000 a Minute. Let me do so again.
“You can’t frugalize income you don’t earn,” Liz writes in Meet the Frugalwoods. She speaks the truth! The biggest truth.
I’m no enemy of thrift. Yes, absolutely, pinch your pennies, if that makes you happy. Frugality is an excellent way to build good habits. Over the long run, many frugal habits combined can make a big difference to your financial situation.
But if you have a low income, do not focus on thrift. It’s a red herring. Instead, turn your attention to Big Wins. And, especially, to increasing your income. Because this is the biggest truth in personal finance: You can’t get rich through frugality alone.
America’s home prices are still rising, currently hovering at a median of $430,000 in April. But at long last, these sky-high housing costs seem poised to fall, perhaps as early as this month.
That’s according to a new report from Realtor.com®, which found that April’s listing prices had ticked up a mere 2.5% compared with a year earlier. That’s the slowest yearly price growth seen since April 2020, when COVID-19 quarantines forced the real estate market to grind to a halt.
Once markets opened up again, the pandemic unleashed a steep and unprecedented ascent in home prices, culminating in a record-setting high of $449,000 last June. But the latest data suggests that this raging seller’s market might have finally reached its peak and will soon peter out.
“At this rate of slowing, listing prices are likely to decline relative to the previous year sometime in May,” predicts Realtor.com Chief Economist Danielle Hale in her latest analysis of housing trends. “For buyers, decelerating and potentially declining listing prices could be a welcome reprieve.”
Why home prices and mortgage rates might have peaked
And here’s more good news for May: As long as inflation continues to lose steam, mortgage interest rates might soon die down as well.
“With the rate of inflation decelerating, rates should gently decline over the course of 2023,” Sam Khater, chief economist of Freddie Mac, predicted recently.
This double dose of hope might be just what homebuyers need to hear right now to hit some open houses and forge ahead.
“We may see an improvement in affordability compared to the previous year in the coming months,” Hale continues. However, “it’s important to note that affordability is expected to continue to create headwinds for many homebuyers this year.”
Indeed, the monthly cost of financing 80% of a typical home is 19% higher than a year ago, which amounts to an extra $340 per month.
Until these costs decline, the housing market might remain largely locked in a staring contest, with homebuyers waiting for prices to fall and sellers waiting for more buyers to come off the sidelines.
“Some buyers and sellers may want to wait,” says Lawrence Yun, chief economist for the National Association of Realtors®.
Yet waiting carries some risks.
“Home prices could be bid up when rates are lower, rather than buyers being able to negotiate for a better price now and then refinance if the rates were to go down,” Yun explains. “With inventory so short, it is unclear if the right home for the price on the market now shows up later.”
Why lower home prices and mortgage rates might not be enough
Although homes might soon cost a bit less, homebuyers may face other problems. For one, there just aren’t enough homes for sale.
Although this April saw 48.3% more listings than a year earlier, inventory “is still well below pre-pandemic levels,” Hale notes. “This means that there were still fewer homes available to buy on a typical day in April than there were a few years ago.”
Plus, April’s inventory growth rate slowed for the second month in a row, with 21.3% fewer fresh properties being added to the overall mix that month.
Many sellers held off on listing because they feel “locked in” by their current low mortgage rates.
Plus, the prospect of selling might seem less enticing, now that the red-hot seller’s market of the past couple of years is on the wane.
In April, 12.2% of listed homes had price cuts. That’s below the 2017–19 average, Hale points out, suggesting that “sellers may be setting their initial asking price to be more in line with buyer expectations than was typical before the pandemic.”
Homes are also lingering on the market, at a median of 49 days in April. That’s 17 days longer than last year, although still shorter than before the pandemic.
Nonetheless, the future looks bright for many sellers, particularly if they’ve owned their home for a while.
“Sellers who have built up home equity are better positioned to find their next home in a cooling market,” Hale says. But they “may need to temper expectations for the sale of their current home.”
Where affordable housing markets are hiding
In the meantime, homebuyers are scrounging far and wide for affordable homes.
Many have targeted less costly metros in the middle of the country, although this, in turn, has caused prices to begin rising in these areas. Prices were up the most compared with a year earlier in Memphis, TN (31.7%), Milwaukee (21.7%), and Kansas City, MO (21.1%).
On the flip side, areas that pulled in the most newcomers during the pandemic—and where prices boomed—are now reversing many of those patterns. The greatest price declines were seen in Austin, TX, where prices were down 8.8% year over year; Las Vegas, where they fell 7.1%; and Houston, down 4.6%.
Yun thinks many of the long-distance moves sparked by the onset of remote work in 2020 might be coming to an end, but work arrangements will still play a role in determining where people live.
“Long-distance regional moves will be limited—for example, moving to the very affordable market of Cincinnati from San Francisco,” he says. “But going to the next county and outer suburbs will be popular. Homes are more affordable in the outer rings, and those with the option to occasionally work from home will not have to commute every day.”