When will you buy your House ?

June 4, 2024 2 min read

Deciding Whether to Buy a House

When considering whether to buy a house, there are many factors to think about, such as location, responsibilities, and family needs. However, one key aspect often discussed is the financial perspective. This discussion is based on trends observed in the US housing market, where data is readily available. These trends are likely similar in other countries, including India.

Source : Realtor.com

Comparing Generations: Baby Boomers vs. Millennials

To understand the current housing market, it’s helpful to compare two generations: baby boomers and millennials. When baby boomers were buying homes, the median home price was $83,000, and the median household income was $23,000. This means that the price of a home was about 3.6 times the household income. This generation entered the workforce around the mid-1980s, making home purchases relatively affordable compared to their income.

Rising Home Prices for Millennials

In contrast, millennials face a much different housing market. Today, the median household income for millennials is $74,000, but the median home price has skyrocketed to $468,000. This makes the price of a home about 6.3 times the household income. The significant increase in home prices compared to income shows that millennials need to spend a larger portion of their earnings on buying a house.

The Impact of Income vs. Home Prices

For baby boomers, with a $2,000 per month income in the 1980s, a smaller portion of their earnings went towards mortgage payments. Despite inflation raising household incomes from $23,000 to $74,000, millennials still face a larger financial burden when purchasing a home. This means that even though incomes have increased, the cost of housing has risen much faster, making it more challenging for millennials to afford homes.

Housing Market Trends in India

Similar trends can be observed in India, although they occur in bursts. There were significant increases in housing prices from 2003 to 2008, from 2010 to 2013, and more recently since the COVID-19 pandemic. On average, housing prices in India are rising much faster than wages. This trend means that the gap between income and home prices is widening, making homeownership increasingly difficult for the average person.

Disclaimers and disclosures : https://tinyurl.com/2763eyaz

If you have any questions, please write to support@weekendinvesting.com

Leave a Reply

Your email address will not be published. Required fields are marked *

Related posts

June 14, 2024 by Weekend Investing
June 14, 2024 by Weekend Investing
June 13, 2024 by Weekend Investing

Practical insights for wealth creation

Join the thousands of regular readers of our weekly newsletter and other updates delivered to your inbox and never miss on our articles.

Thank you. You will hear from us soon.

Mail Sent Failed !

    vector

    When will you buy your House ?