The 3 Most Depressing Parts Of The Housing Crisis

In today’s Freshly Squeezed section, we link to some of our recent installments on housing. They help support a lot of what we’re riffing on today. 

The Juice tends to focus on the cost of home ownership. While we’ll do that a little bit today — because it’s important (and depressing) — we’ll also consider renting. Because things aren’t much better in the rental market. 

Right to it with what The Juice thinks are the three most depressing parts of the nation’s housing crisis. 

Home Ownership Is Impossible 

Of course, you have to start with this. It’s the most glaring and depressing part. Because it shoots to hell the old trajectory of 

• rent for a few years, 
• save a couple bucks thanks to a decent job, 
• then buy a house with a manageable mortgage. 

Even as mortgage interest rates started to come down, monthly payments remained massive. But, to make matters even more depressing, thanks to a stronger-than-expected economy and job market, mortgage interest rates have actually gone back up even after the Fed cuts. 

As we write this, the rate on the 30-year is 6.64%. Attach that to a $500,000 home and, after a $100,000 down payment (that’s 20% and also a lot of freaking money), you’re looking at a monthly payment of $3,232, including taxes and insurance. You need to earn considerably more than $10,000 a month to be able to afford that payment. 

So, yeah, impossible. 

• Who is saving $100,000 and then turning around to make a down payment with it? 
• Are you able to actually qualify for a 6.6% rate? 
• Do you have the income to even qualify for a loan with such a high payment in the first place?
• Who in the world is buying homes these days? Especially in cities where it’s tough to find anything for $500,000. 

If seeing home ownership become another privilege only the well-off can afford isn’t depressing, we don’t know what is. 

Renting Is Also Pretty Expensive

Okay, fine. There’s nothing wrong with a nation of renters. Especially if they’re making decent money and either prefer renting or can live comfortably while falling just shy of becoming a homeowner.

But, renting isn’t cheap either. And renters aren’t having a great time right now. 

• The median rent for an apartment in the United States is $2,095. 
• In the northeast, it’s $2,504. In the west, it’s $2,365. 
• At $2,300, you need to earn about $92,000 to afford rent. 

Keep that in mind. To afford the typical apartment, you need to earn close to six figures. That’s tough. 

• In 2023, about half of renters nationwide were spending more than 30% of their income on housing. The Juice expects that number to remain steady or get worse when 2024 is said and done. 
• Between 2022 and 2023, national rent prices increased by 3.8%, which beats the 1.8% pop in home values. 

How Housing Can Impact Retirement (Or Working In Old Age)

So, yeah, it’s depressing. You need to earn about $100,000 to not spend more than 30% of your income on housing. 

But, it gets even crazier, when you combine the first two depressing points and look ahead. 

Consider what is a scenario more common than we’d like to believe:

• You spend 30% or more of your income on rent. 
• You can’t afford to buy a house. Maybe you don’t have the down payment. You can’t get a mortgage. Or you just don’t make enough to support home ownership. 
• But you get by and actually do alright as a renter. As a relatively young renter. 

What happens when you turn 55, 60, 65, 70, 75 and you have a $2,000 or $3,000 or more thousand dollars a month rent payment? 

What happens if that eats up a considerable chunk of your Social Security payment, which, ideally, you don’t want to take at age 62? What happens before you turn 62? 

What if because of the high cost of rent all those years and your inability to buy (and pay off) a home, you were unable to save enough money for retirement to work in concert with Social Security?

These are all very depressing what happens, what ifs and — let’s face it — hard realities of the housing crisis we’re facing and, as a nation, choosing to ignore. 

The Bottom Line: This is the thing about home ownership. It’s not necessarily the end all and be all. But, if you can do it when you’re relatively young and not break your back financially in the process, you make your prospects for retirement brighter. 

Ideally, you go into retirement with no or a very low housing payment. But you can’t do this if you can’t afford to buy a home or if you’re stuck with a high rent payment (that keeps going up) basically for life. 

Are we overreacting? Obviously, we don’t think so. 

Please feel free to share your perspective using the feedback link at the bottom of the page. How are you — or your kids, other family members, friends — navigating not only this housing market, but considering your prospects for life in your 50s, 60s and beyond?

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