Buying A Home Is Getting Harder But Some Creative Thinking May Help

Home buying is getting more unaffordable for those earning an average income, forcing many to scrap plans to purchase while others may take unexpected paths to ownership.

In 2023, buying a home has become even less possible for many, according to property data provider ATTOM’s recemntly released third-quarter Home Affordability Report. More than 99% of the counties analyzed were less affordable than their historic affordability averages, ATTOM found.

This county analysis figure is part of a two-year pattern of home ownership becoming more unaffordable for the average U.S. wage earner. It is up 1 percentage point from the previous quarter and 3.8 percentage points from the same period of last year. 

As unaffordability forces people to get creative when buying a home, one possible avenue is multi-family houses. “Clients could consider purchasing a duplex or fourplex as a way to subsidize the mortgage payment leftover for them to pay,” Kassi M. Fetters, a financial planner at Artica Financial Services, told Investopedia.

Think of it like this: if you bought a multi-family home and rented a portion of the home, the rent you earn could go towards paying a portion of your mortgage, as opposed to you bearing the entire cost of the mortgage payment if you bought a single family home with the same loan amount.

Robo-advisors could be another unexpected avenue for people to use to save to buy a home. A robo-advisor is a digital platform that provides automated, algorithm-driven planning and investment services. Investopedia’s 2023 Robo-Advisor Consumer Survey found that nearly half (49.8%) of those using robo-advisors to invest are doing so with the goal of buying a home.

That comes as a surprise, considering robo-advisors have typically been associated with long-term savings goals such as retirement or college-savings. However, that doesn’t mean they cannot be effective to set money aside for a medium-term goal such as a downpayment.

For many, buying a home is the biggest financial decision of their lifetime. “Buying a home is more a personal decision than a financial one,” Spenser Liszt, a financial planner at Paradigm Advisors, said. “Remember, it’s OK to delay purchasing a home in order to get your finances in order and find the right home for your family.”

The report from ATTOM analyzed monthly homeowner expenses and average income data from the Bureau of Labor Statistics. Current figures were compared with a 28% debt-to-income ratio, which is commonly used in mortgage lending.

The perfect situation to buy a home is “those who have $200,000 for a down payment and a rather significant household income,” which is far from the reality for most Americans, Cetera Investment Advisor Constantine Tsantes told Investopedia.