In 2021, only 40% of the homes available for sale in the United States was deemed “affordable” by the “typical” household, which seems preposterous since 100% of the population needs somewhere to live. And yet, in 2022, rising interest rates and home prices made only 21% of the homes listed for sale “affordable”. That same trend continues as we near the end of Q1 2023.
Regarding affordability, there are dozens of theories out there, which are then promulgated by thousands of podcasts, radio shows, special reports, articles, white papers, etc., touting one twist or another on the subject. As no two households are alike, I believe that all opinions are useful to at least consider. Per the Washington Labor Council, the guideline for housing affordability is that housing costs, including utilities, do not surpass 30% of the gross income of the inhabitants of that dwelling. And who can argue with anything out of Washington?
The median household income in Utah County is $96,000 per year, which is $8,000 per month. Thirty percent of that is $2,400. Assuming $500 per month for taxes, insurance, and utilities, that leaves room for a $290,000 loan with today’s interest rates. I’ve met with thousands of people over the last 25 years and it’s extremely rare that a first time homebuyer has hundreds of thousands of dollars for a down payment. Which leaves a huge disconnect between median income and the $467,870 median sales price (as of Jan 2023). I don’t know if you have perused the homes listed for sale recently, but there aren’t as many sub-$300,000 homes for sale as there are people in the valley making less than $96K. As of this moment, there are precisely 34 homes for sale under that level, and 1,587 for sale above $300,000.
That means that if your favorite son, daughter, niece, friend, etc. doesn’t want to rent, nor move out of state, (I’ve heard this week that Wisconsin and South Carolina are both less expensive places to live), the people with aspirations for homeownership should snatch up one of the 34 homes as quickly as they possibly can. OR, they could pool their resources and spring for something like the property pictured above. However, with a price of $15M per bedroom there’d need to be a certain degree of flexibility regarding sleeping arrangements. But the pool would be killer for parties. And the kitchen is an “entertainer’s dream”.