Housing affordability is a massive problem, especially for younger Americans. With high mortgage rates and sticker shock, many buyers are having to get creative to buy a home.
Jeff Ostrowski is an analyst for Bankrate. He says younger generations are feeling the brunt of the housing crisis because they have no equity to build on. “This is a real generational divide,” Ostrowski said.
With the average home cost hovering around $400,000, wage growth hasn’t come close to keeping up with the cost of housing.
So, what can first-time buyers do?
1. Consider a smaller down payment
Ostrowski says you may need to accept that saving the traditional 20% down payment on a home may be out of reach right now. “It’s perfectly acceptable to put down 5% or 10%,” he said. “Saving up $80,000 while you’re also dealing with the skyrocketing rent and student loans and credit card debt and everything else. It’s just really difficult.”