My partner and I closed on our house in January 2021. Now that the date sits more than 5 years in the rear-view mirror, I think back on how it happened. And my answers aren’t very comforting for those looking to buy a house now.
Our Story
We bought our house from our landlord. Indeed, we had been renting the house for 4 years when they asked us if we wanted to buy it. We did. They offered us a fair price, and we managed to scrape together the funds for a 20% down payment.
On that last point, we had already been saving for a down payment. We were planning to start house shopping in the next few years. But the landlord’s offer took us by surprise. It wasn’t easy to get over the top, but we made it. The head start helped.
And there’s one other thing that helped us. Over the long term, it’s probably even more important than the social connections and the savings. What might that be?
Low interest rates! We bought a house at just the right moment. Interest rates had cratered, and we landed a 30-year mortgage at 2.5%! That rate was historically unprecedented, and it’s unlikely to happen again. It required only a pandemic and mass panic.
What can others learn from our story?
Getting Lucky
Well, most of us have to get pretty lucky to buy a house.
My partner and I had many advantages in late 2020 and early 2021. We’re not rich, but both of us had stable work in unstable times. We sat easily in the top 50% of household income in our area, and probably in the top 25% or so.
But even those advantages weren’t enough. Not even the income, the low interest rates, the reasonable sticker price, and the fact that we had some savings was enough. It took a global pandemic that pushed our landlord to retire. And, even after all these things, we still struggled a bit. We especially struggled at first.
In other words, even when everything goes right, it’s still tough out there.
What About Everyone Else?
Where does that leave everyone else struggling to buy a home?
The fact of that matter is that it’s hard to buy a house these days. It’s especially hard for Millennials and Gen Z. For a person with an average income, it’s practically impossible.
Economic polarization – plus the financialization of our economy, including the flooding of housing markets by private equity and Airbnb grifters – has all but eliminated the ability of the average person to buy a house.
Everyone I know who has managed to do it has struggled. And most of them are people who could’ve easily bought a house a generation ago.
For the small number of people doing well, our current economy works great. But for most people, they’re stuck eternally paying rent. They’re not building the kind of generational wealth that once came widely from home ownership.
One has to wonder when this system will run into its limits.
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