The Bright Side Of America’s Housing Crisis - InvestingChannel

The Bright Side Of America’s Housing Crisis

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The Bright Side Of America’s Housing Crisis

In a 2024 when we have decided to focus on retirement, we’re spending a significant amount of time on housing. 

Because the two are inextricably linked. Housing can make or break retirements. 

In today’s Juice, we do the following:

  • Look at the bright side of the housing market, as it relates to retirement
  • Discuss why the crisis matters to all of us, even if you’re on the bright side
  • Link to the retirement-specific Juices we have done so far and preview what’s to come.  

In our most recent housing installment from early March, America’s Housing Crisis: From Bad To Worse, we outlined the sad state of affairs on housing:

We don’t need to cite another survey that says many people in younger generations think they’ll be lifelong renters. To some degree, this isn’t a problem. You can become wealthy as a renter. In fact, without the financial burden of home ownership, you could argue it might be easier to build wealth and end up with $1 million-plus come retirement. 

That said, if you’re never able to buy a home and pay off a mortgage, you’ll likely be left with a housing payment in retirement. And, depending on where you want to live, that payment as a renter or as the result of becoming a homeowner in middle-to-old age could be thousands of dollars. That’s a hefty budget line item to have to satisfy month after month as you draw down your retirement nest egg.

To that, we received this response from a Juice subscriber named David:

I agree completely. With the actual cost of homes today as well as the taxes and Insurance costs to cover, it’s not affordable for many people. I am fortunate as I own my personal residence as well as two rental properties: all three with no mortgages. Even though I own them free and clear it still costs $8,000 to $12,000.00 annually for taxes and insurance.

Emphasis added on the “all three with no mortgages” part. 

According to the latest government data: 

  • 22.6% of loans have interest rates below 3%
  • 59.4% are below 4%
  • 78.7% are below 5%

Then, there are the people who are free and clear, meaning they have no mortgage. It’s paid off. Or they paid cash and never had a mortgage in the first place. 

People such as David. 

However, as David points out, even if you own a home outright, there are still home ownership-related costs. In many areas of the nation, the cost of insurance and property tax continues to increase — sometimes at a brisk pace — putting the squeeze on, for example, older people on fixed incomes. 

Not long ago, The Juice interacted with a senior in this situation:

I live close to the area Intel is putting in a “super chip center”. Housing has gone from $250,000 to well over $400,000 in the last four years. My home is quickly appreciating and I’m watching the appraised value go up. I have friends who have moved from Ohio to Tennessee just because their property taxes went from $3,000 to over $10,000 in a few short years. 

This person is concerned about being able to afford the rising property tax on her home. 

On the other end of the housing crisis spectrum, there are young people and others who would like to become homeowners who can’t do it anywhere in the nation or in parts of the nation where they’d like to live and where there are good jobs. 

So, absolutely, the housing crisis matters to all of us. No matter how you look at it. 

We have all heard the stories of millennials and even Gen X living with or getting help from Mom and Dad. On one hand, this is a semi-solution. If you have well-off parents and they can help fund home ownership, more power to you. However, at times, the people helping are sacrificing their quality of life and, often, raiding their retirement money. 

A persistent housing crisis will only make the retirement crisis worse. 

The more people who carry a housing payment — be it an ongoing rent payment or a mortgage payment that’s too rich for their blood — into midlife and beyond, the more people we’ll likely see struggling to save for retirement.

And, with the interest rate on a 30-year mortgage still stubbornly hanging around 7%, there’s not much relief. On a $400,000 home, you’re looking at a monthly payment of more than $3,000, including taxes and insurance, after putting 10% down. 

The only relief out there is to seek housing in relatively small towns and cities. recently listed the top markets for first-time homebuyers. Most of the places are suburbs of small cities, such as Buffalo, Rochester and, in some instances, small cities themselves, particularly Grand Rapids, Michigan. 

As one example, the median list price in Cheektowaga, New York, a Buffalo suburb close to the airport, is around $200,000. This knocks that monthly payment down to a much more manageable $1,600. 

If this is the only solution to the housing crisis — living in a relatively small, but increasingly expensive place — we’re really in trouble. 

The Bottom Line: As always, we want your thoughts, insight and feedback on housing and everything else we cover here at The Juice. Use the link at the bottom of this page to correspond with us. 

As promised, here’s what we have done on retirement so far this year:

Has Generation Z Given Up On Retirement?

The Big Problem With 401(k)s And IRAs

Has Retirement Had Its Day? (Most popular)

The Road To Retirement: A Mid-Life Crisis

Retirement In 2024: More Wisdom From The Juice’s Crowd

Dividend Stocks In Retirement: The Biggest Lie?

The Most Important Retirement Investing You’ll Ever Learn

Cost Of Living Can Make Or Break Your Retirement

America’s Other Retirement Crisis

We’re building quite the library here at The Juice

So, grab a cup of tea, a beer or a glass of wine and do some retirement-related reading. And please forward this email or share this page with a friend who might benefit from the conversations.

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