For the first time since 2020, we’ve got some good news: housing affordability is finally improving! Mortgage rates have dropped from 7.07% to 6.09% over the last year, which is a win for homebuyers. But, even with that dip, affordability is still a challenge for many.
Here's where things stand: To afford the average U.S. home, you'd need to earn around $115,000 per year (down 1.4% from last year). But, with the typical household income sitting at about $84,000, there’s still a 27% gap between what most people make and what’s needed to comfortably buy a median-priced home.
So, what’s the takeaway? Homeownership is still on the table—you just might need to be a little flexible. Making smart compromises can help you snag a home you love without breaking the bank or losing too much from your must-have list. Let’s talk about the top trade-offs buyers are making in 2024 and how you can make the right choices for you.
Top Compromises Buyers Are Making
A survey from Homes.com and Apartment Therapy asked 676 recent and prospective buyers, plus real estate pros, about what they’re seeing in the market right now. Here’s what’s trending:
Condos and Townhomes Are Having a Moment
With single-family homes getting harder to afford, more buyers are shifting their focus to condos and townhomes. If you’ve got a budget under $500,000, around 17% of buyers are now looking at condos or apartments, and 15% are exploring townhomes as alternatives.
Condos and townhomes can offer a more budget-friendly way to get into the market, especially in locations you love. Sure, a condo might not have that spacious backyard or the privacy of a house, but it can offer a low-maintenance lifestyle with perks like pools or gyms. Just don’t forget to factor in those HOA fees when you’re crunching the numbers.
Location, Location… Compromise?
We all know location is key when buying a home. But with prices climbing in hot neighborhoods, a lot of buyers are expanding their search areas to find homes within their budget. About 21% of buyers have ended up purchasing outside of their ideal neighborhood, and a third of current buyers are thinking about doing the same.
Expanding your search by just a few miles can make all the difference. It might open up more affordable options while still keeping you close to everything you want.
How to Make Smart Compromises Without Regret
The trick is knowing where to bend and where to stand firm. Here’s how to navigate those decisions:
Focus on What You Can’t ChangeIt’s easy to get caught up in details like paint colors or flooring, but those are simple to change down the road. Instead, prioritize the bigger things that are tougher to fix—like the layout, structure, and location.
Think About the FutureAs you search, keep in mind not just what you need right now, but what you’ll need in a few years. A condo might be perfect today, but if you’re planning to grow your family or need more space, you might find yourself house hunting again sooner than you'd like.
Stick to Your BudgetI know it’s tempting to stretch your budget for a home you love, but going overboard financially can cause major stress later on. Be sure to account for everything—mortgage payments, property taxes, insurance, and HOA fees—so you’re prepared for the full picture.
Compromise Doesn’t Mean Settling
At the end of the day, it’s about finding the balance between flexibility and what matters most. By focusing on things like location and long-term potential, while staying flexible on cosmetic stuff, you can make a smart purchase you’ll feel great about. And remember, having a good agent (hi, that’s me!) can help you make confident choices along the way.
Buying a home is a journey, but with some careful planning and a little compromise, your next home can still be everything you’re dreaming of—and more!
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