Erin Sykes, chief economist at Nest Seekers International, comments on how high interest rates continue to hurt the housing market on her show The Bottom Line.
Despite their combined six-figure income, the dream of home ownership has become impossible for young Americans Laura and Samuel Graves, who have no choice but to build their family in a suburban Portland apartment while they patiently search for a home that fits their budget.
“We refuse to become homeless, and like so many others, we have chosen to sit out until the housing market becomes affordable again,” Laura, a financial analyst, said in an article published by Business Insider on Sunday.
In addition to her husband’s salary as an electrician, the couple makes about $250,000 a year. According to the report, the couple hopes to keep their monthly mortgage payment around $3,000, but most of the homes they are looking to buy are about $2,000 more than that on average. They also claim to be cutting back on retirement savings and child care costs to help them improve their situation.
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Americans continue to face tough housing market challenges. (Photo by Liu Guangwan/China News Service/VCG via Getty Images/Getty Images)
Add this millennial couple to the growing number of people who are refusing to shoulder the financial burden associated with housing costs in today’s market and have chosen alternative living conditions to alleviate those expenses.
In Laura and Samuel’s case, they set aside only 3% of their income for retirement, instead of the ideal 15%, and instead of sending their children to full-time summer camp, they opted for part-time camp, the report said.
With prices and interest rates rising, the idea of saving enough money to move into a dream home seems out of reach for couples.
“Our kids started talking about how they wanted their own house and rooms,” Laura told the newspaper. “We’ll never get those years back. By the time we buy a house, we won’t even need room for a playset.”
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The Graves family told Business Insider that they were setting aside 3% of their income for retirement. (Getty Images/Getty Images)
But there is some positive news on the horizon for those looking to buy a home. Realtor.com Report A study released earlier this month showed that home prices fell in July as sellers tried to attract potential buyers, with the average reaching $439,950 from $445,000 the previous month.
“First, prices remain higher than expected, which means less buyer activity,” said Ralph McLaughlin, senior economist at Realtor.com. “Second, the prospect of lower mortgage rates this fall may have prompted some buyers to wait. That combination has prompted sellers to lower their prices in order to attract more buyers.”
A Zillow estimate found that the median home value in the Portland area where the Graves family is looking for a home is $541,000, and $642,000 in the Wilsonville suburb where they currently reside, Business Insider reported.
But waiting out the market isn’t the only sacrifice buyers have had to make.
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The vast majority of current renters say they can’t afford to buy a home, with 54% saying they are pessimistic about achieving their goal of home ownership, according to a new CNN poll.
Some social media trends suggest that millennials have made sacrifices in other ways, even going so far as to live in cost-effective vans to save money for the dream of buying a home.
Cost has become a significant enough factor that about one in five potential home buyers are considering shopping in a less safe neighborhood to find a more affordable home, according to Redfin.
Other young people have had to turn to parents for help with the cost of a down payment on a home, or have even chosen to live with their parents longer to help ease some of their financial burden and save more money for the future.
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FOX Business’s Kendall Tietz and Megan Heaney contributed to this report.