A millennial couple who make $250,000 say they can't find a home in their budget: 'We refuse to become house-poor' (2024)

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Economy

Jacob Zinkula

A millennial couple who make $250,000 say they can't find a home in their budget: 'We refuse to become house-poor' (1)

  • A millennial couple who each make six figures say they're struggling to afford a home in Portland, Oregon.
  • They don't want their monthly mortgage payment to exceed 30% of their take-home income.
  • They say they've been saving less for retirement and cutting back on childcare costs.

A millennial couple who make $250,000 say they can't find a home in their budget: 'We refuse to become house-poor' (2)

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A millennial couple who make $250,000 say they can't find a home in their budget: 'We refuse to become house-poor' (3)

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A millennial couple who make $250,000 say they can't find a home in their budget: 'We refuse to become house-poor' (4)

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Laura Graves and her husband, Samuel, never thought they'd be raising their two children in an apartment, but they say the housing market has left them with little choice.

Over the past three years, the couple, who are both 36 and live in a suburb of Portland, Oregon, have been looking for a home. They want to keep their monthly mortgage payment between $3,000 and $3,500 — or about 30% of their monthly take-home income of about $11,000. Laura is a financial analyst, and Samuel is an electrician, and they each made six figures last year, totaling $250,000.

But rising home prices and mortgage rates in recent years have made this goal difficult to accomplish. Laura says most homes they're interested in would require a monthly mortgage payment of at least $5,000, or about half of their monthly income. So rather than splurging on a home outside their budget, they've decided to wait, pay $2,700 a month for a two-bedroom apartment and a storage unit, and cross their fingers that the market moves in their favor.

"We refuse to become 'house-poor' and, like many others, are choosing to sit it out until the housing market is reasonable again," Laura said. Someone is "house-poor" when they're struggling financially because their homeownership costs are too high.

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Laura and Samuel are among a group of Americans with six-figure incomes who say they can't find a home they desire that's in their budget. In recent years, high home prices and elevated mortgage rates have propelled the cost of homeownership in the US to near-record-high unaffordability levels. While the Federal Reserve's expected interest-rate cuts may lower mortgage rates, they may not do much to help housing affordability in the immediate future. That's because lower rates could cause buyers to flood the market and push up prices, and a slight reduction in rates may be enough to persuade homeowners with ultralow mortgage rates to sell their homes — keeping the housing supply lower and home prices higher.

To be sure, the average 30-year fixed mortgage rate recently fell to its lowest level in more than a year, but it's still considerably higher than it was in 2021 and 2022.

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Laura and Samuel shared whether they've considered moving for cheaper housing and how they're trying to save for a home.

There's not enough money for a home, retirement, and childcare

Homes don't come cheap in the Portland area. According to Zillow, the average home value in Portland is $541,000, and in Wilsonville, the Portland suburb where the couple resides, it's $642,000. A SmartAsset analysis of home sale prices published in June found that Portland was the 15th-most-expensive housing market in the country.

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Laura pointed to one home in Wilsonville they were interested in that was listed for $635,000. With an 11% down payment, they estimated their monthly mortgage payment would be about $5,000 — about 43% of the couple's take-home monthly pay.

The couple knows that other areas of the US may have more affordable housing, but they're not sure they'd want to move again.

The couple lived in Portland for six years before moving to their hometown of Spokane, Washington in 2018. Housing was more affordable — Laura said they bought a home with a monthly mortgage payment of $2,200 — but she and Samuel found themselves missing their work back in Portland.

In 2021, after Laura's old supervisor offered to double her pay if she returned to her old job, the couple decided to sell their home and move back to Portland.

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"We actually tried uprooting the kids to a more affordable town and found ourselves less happy in the end," Laura said.

When they first moved back and began looking for homes, Laura said, they were a "little picky" because they didn't want to overpay for a home they didn't love. They weren't rewarded for their patience — home prices and mortgages continued to tick up.

To save for a home, Laura says, she and Samuel aren't saving as much for retirement as they'd like to. Ideally, they'd be putting 15% of their annual income toward retirement — some experts recommend this — but Laura says they've only been able to set aside roughly 3%.

The couple has also opted for the part-time summer-camp option for their two children, who are 7 and 9 years old. Laura says sending her kids to their camp full-time would have collectively cost about $5,000 a month. When they're not at camp, she says, the kids stay home with her while she works remotely.

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Going forward, Laura says they plan to continue monitoring the housing market for a home they like that's in their budget. While they're trying to remain patient, she says, they're not optimistic that home prices or mortgage rates will drop considerably anytime soon.

"Our children have begun talking about how they want a house so badly and their own rooms," she said. "We'll never get these years back. By the time we buy, we won't even need room for a play set."

Are you struggling to afford a home? Are you willing to share your story? Reach out to this reporter at jzinkula@businessinsider.com.

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A millennial couple who make $250,000 say they can't find a home in their budget: 'We refuse to become house-poor' (2024)

FAQs

What percentage of millennials say they can t afford to buy a home? ›

The survey found that 63% of Americans can't afford to buy a home this year, with 87% of Gen Z unable to and 62% of millennials unable to. Given the housing market, 1 in 4 surveyed no longer believe that homeownership is a good investment in the long run, and 1 in 3 don't believe it should still be the American dream.

How do millennials afford a house? ›

Tips for Becoming a First-Time Home Buyer
  1. Start Saving More. You'll need money for a down payment, for closing costs, for taxes, for utilities, for an emergency fund for when the heater or AC goes out. ...
  2. Clean up Your Credit. ...
  3. Lean into It. ...
  4. Find a Real Estate Agent. ...
  5. Talk to a Lender. ...
  6. Redefine Your Hipster Attitude. ...
  7. Get Skilled.

Why are millennials not buying homes? ›

Key Takeaways. Millennials are not buying homes as readily as the previous generation. Delaying marriage and having children is keeping many Millennials at home with their parents. Tighter lending criteria can also make homeownership unaffordable or virtually impossible for those without much credit history.

Will Gen Z be able to buy a house? ›

Implications for Housing Preferences of Generation Z

Nearly all of them, 97%, hope to own a home in the future. About 100,000 members of Gen Z have already purchased a home. Almost half of these paid less than $10,000 for a down payment. Most of these had saved for a down payment for less than five years.

What percentage of millennials own their own home? ›

Millennials in America have hit a significant milestone according to the latest data from the U.S. Census Bureau: a homeownership rate of 51.5%.

What type of housing do millennials want? ›

Millennials are looking for smaller, more affordable homes that feature low-maintenance outdoor spaces in vibrant neighborhoods. They're uninterested in the large, outdated houses of their parents and are instead seeking out more modern and energy-efficient places to live.

Do millennials rent or own? ›

In Closing. As the housing market shifts with the different generations, it's essential to follow the trends. Currently, Millennials renting over buying continues to be the trend for a multitude of reasons, including their love for freedom, their lack of handy skills, and the shift in the American Dream.

What percentage of millennials income is devoted to housing costs? ›

On average, under-25s spent 43% of their after-tax income on housing and education (including interest payments on student debt) in 2022 — less than what the typical under-25 paid between 1989 and 2019, per The Economist.

What is the homeownership rate for millennials? ›

Just over a quarter (26.3 percent) of adult Gen Zers owned a home in 2023, a small boost from 26.2 percent in 2022, according to Redfin's data. The homeownership rate for millennials rose to 54.8 percent from 52 percent, and the homeownership rate for Gen X rose to 72 percent from 70.5 percent.

What is the average age millennials buy a house? ›

Young adults are waiting longer to buy a home

Are these the factors Americans should consider when deciding to become a homeowner for the first time? In 2022, the average age of first-time homebuyers was 36, according to the National Association of Realtors (NAR). This is up from 33 in 2021.

Why do millennials have so much debt? ›

King said millennials' purchasing preferences and the soaring cost of living has led many into "a vicious cycle of taking on more debt." Many were "forced" to rely on credit cards and loans to meet their needs, adding to their "crippling debt pile."

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