There’s no shortage of research on the housing crisis. Every week, you can find the headlines in your feed. It doesn’t matter where you live:
- New Idaho legislative committee aims to identify barriers – and solutions – to housing issues
- Hawaii remains in a severe housing crisis, new report says
- New study shows affordability crisis in Nevada rural housing
- Why Housing Prices are High in Maine
I could keep going, but you get the idea.
But these stories simply report on the prices you need to pay to secure a home. There’s a lot more to it than that. Here are three new studies – all from reputable sources – that I haven’t seen reported yet.
Age is indeed a number
New homes cost more than old homes, just like new cars cost more than used cars. In both instances, frugal Americans often try to save by purchasing older models. That’s just smart personal finance. But there’s a problem.
If you buy a used car that’s 20 years old as opposed to 5 years old, you’ll surely run into more maintenance issues. Well, according to the online real estate firm Redfin, “The typical home bought in the U.S. hit a record age of 36 years in 2024. That’s nine years older than the median age of homes purchased in 2012.”
Even worse, “Buyers pay less for older homes (over 30 years old) than for newer homes (under five years old), but the gap is shrinking.”
Shrinking is an understatement. Back in 2012, you could save an average of 77% off the list price if you bought a 30-year-old home compared to a new home. Today? You’d save just under 32%.
As president of Debt.com, I monitor the reasons our clients fall into debt. The biggest are an illness or an accident that not only cost money to fix but takes them out of the workforce while they recover. But believe it or not, home repair is also a big reason.
I’m not talking about a natural disaster that structurally damages your home, either. Installing a new HVAC system can cost $10,000. A water heater can run a couple thousand dollars. Older homes have more serious (and more costly) plumbing and electrical problems.
Almost half of all Americans lack an emergency fund to pay for big-ticket surprises that older homes can throw at them. This worries me. As homes get older, I expect to see more owners hit with unexpected expenses they just can’t cover. That means putting them on their credit cards and paying up to and above 20%.
Renting is as costly as buying
Zillow is a Redfin competitor, and its latest research is quite clever. It posed this question: How much do you need to earn if you want to spend no more than 30% of your income on rent? That 30% is an agreed-upon benchmark among financial experts.
Zillow concluded…
Nationwide, renters today need to earn more than $80,000 to comfortably afford the typical rental, up from $60,000 just five years ago. In eight major metro areas, renters now need to make six figures to comfortably afford rent.
That’s right. In the following cities, you need to earn $100,000 to comfortably afford a rental unit: San Jose, New York, Boston, San Diego, San Francisco, Los Angeles, Miami and Riverside, California.
Now, you might be saying, “I don’t live in any of those places, so why should I care?” Because Zillow also says rent for a typical U.S. apartment has increased by 28.7% since 2020 – but median household income has only risen by 22.5%. So the problem isn’t going to stop in those pricey markets. Eventually, it’ll catch up to us all.
Home equity loans and the economy
Not to be an even bigger downer, but your financial woes might not end when you finally move into your home. In fact, if you bought more house than you could afford, there can be new problems.
One of the biggest benefits to homeownership is building up equity – basically, the share of your home that you own versus what you owe on your mortgage. In tough times, you can cash out some of that equity. It’s a dangerous move for obvious reasons, but software firm MeridianLink reports that more homeowners than ever are considering it.
“Nearly three in 10 (28%) American homeowners are considering taking out a home equity loan or HELOC in the next 12 months,” its research shows. “This marks a notable 7% increase compared to 2022.”
It doesn’t take much research to figure out why this is happening. MeridianLink calls it “economic uncertainty.” I call it the constant clobbering of the American consumer – pandemic, inflation, supply constraints, tariff talk, student loan unpredictability. It adds up to homeowners looking to their most valuable asset to get them through tough times.
That’s almost always a mistake, because tough times come and go, but building equity is slow. If you’re struggling with rent or home expenses, I urge you to call Debt.com – if for no other reason than to receive a free debt analysis. In “economic uncertainty,” a confidential deep dive into your finances with a certified credit counselor can be reassuring all by itself.
