Laura Graves and her husband, Samuel, never thought they’d be raising their two children in an apartment, but they say the housing market has left them with little choice.
Over the past three years, the couple, who are both 36 and live in a suburb of Portland, Oregon, have been looking for a home. They want to keep their monthly mortgage payment between $3,000 and $3,500 — or about 30% of their monthly take-home income of about $11,000. Laura is a financial analyst, and Samuel is an electrician, and they each made six figures last year, totaling $250,000.
But rising home prices and mortgage rates in recent years have made this goal difficult to accomplish. Laura says most homes they’re interested in would require a monthly mortgage payment of at least $5,000, or about half of their monthly income. So rather than splurging on a home outside their budget, they’ve decided to wait, pay $2,700 a month for a two-bedroom apartment and a storage unit, and cross their fingers that the market moves in their favor.
“We refuse to become ‘house-poor’ and, like many others, are choosing to sit it out until the housing market is reasonable again,” Laura said. Someone is “house-poor” when they’re struggling financially because their homeownership costs are too high.
Laura and Samuel are among a group of Americans with six-figure incomes who say they can’t find a home they desire that’s in their budget. In recent years, high home prices and elevated mortgage rates have propelled the cost of homeownership in the US to near-record-high unaffordability levels. While the Federal Reserve’s expected interest-rate cuts may lower mortgage rates, they may not do much to help housing affordability in the immediate future. That’s because lower rates could cause buyers to flood the market and push up prices, and a slight reduction in rates may be enough to persuade homeowners with ultralow mortgage rates to sell their homes — keeping the housing supply lower and home prices higher.