The process of buying a home can be intimidating and complicated for various reasons, and there are certainly a few different factors to consider before purchasing a home. That's perhaps especially true if you currently rent and are waiting for the right time to buy a house. For instance, it's important to be well aware of your financial situation as well as how much it will cost you to purchase an ideal property.
Unless you're lucky enough to be able to cover the full amount of a new home, then you're likely going to need to save up for a downpayment, arrange a mortgage, and put aside purchasing fees (for lawyers, taxes, etc.), according to financial expert and real estate investor Paula Pant who broke down the kind of costs that are involved for CNBC's Select. That's not to mention the money needed for moving and having enough funds left over to cover any work that you might need to do on your home either immediately or in the future.
Beyond that, you also need to figure out where you can afford to buy a home. Due to the fact that some areas are more expensive than others, you may not have enough money to purchase a home in your dream neighborhood. In fact, it turns out that a fair share of people can't even afford to buy a home in the city where they currently live.
If you or someone you know is interested in transitioning from a renter to a home-owner, then you might be shocked and daunted to find out that when it comes to how much the average home costs in the U.S. compared to the average American income, the former is whopping seven times higher than the latter, according to Porch. Beyond that, a staggering 61% of people who rent wouldn't be able to buy a home in the cities where they live because costs are simply too high.
When Porch did a survey and took a look at the data, they found that cities in Colorado, Massachusetts, Hawaii, and Pennsylvania, as well as New York and New Jersey, were all causing issues due to costs. The list also included Raleigh in North Carolina, Tucson in Arizona, and Washington, DC, not to mention 10 spots around California, including Los Angeles, where the number of people who live in L.A. and are actually able to afford a home sits at just 4%.
A spokesperson from Porch told New York Post that the incredibly tight housing market will leave first-time homebuyers stuck renting for longer than the generations before them. Fortunately for anyone living in Johnston, Pennsylvania, 80% of people who rent their homes there are in a financial situation to buy.