Median-Priced U.S. Homes Now Require $117K Annual Income — Up $20K from Last Year. Cheaper Residential Real Estate Investment Option.
High interest rates can negatively impact the housing market, yet despite the aggressive rate hikes by the Federal Reserve, homes remain unaffordable.
The median price of existing homes in the U.S. stood at $375,400 in March 2023, marking a 1% year-on-year decline, as reported by Harvard University’s Joint Center for Housing Studies.
However, with the influence of higher interest rates, the monthly mortgage payment for a median-priced home in March rose to $2,300, a 29% increase from the previous year’s $1,780.
Homeownership expenses extend beyond mortgage payments. Taking property taxes and insurance into account, the total monthly ownership cost of a median home in the U.S. amounted to $3,000, as estimated by Harvard researchers.
To afford such a home, an annual income of $117,100 is necessary, up from $97,400 a year ago, according to the study’s findings. Consequently, millions of households are now priced out of the market.
The study revealed a 32% decrease in renter households capable of affording higher payments, reducing from 7.5 million to 5.1 million. This translates to a loss of 2.4 million potential homebuyers.
Despite the ongoing housing affordability challenge, innovative companies are addressing the issue with alternative housing solutions.
One notable example is Boxabl, known for constructing prefabricated modular housing units. The Casita, their flagship product, boasts numerous features such as a full-size bathroom, kitchen, appliances, tall ceilings, and large windows. With a compact size of 361 square feet, the Casita can be assembled within an hour and has a starting price of around $50,000.
The appeal of the Casita is evident, with over 170,000 people currently on the waitlist, including Tesla Inc. CEO Elon Musk, who uses one as a guest house.
If you’re interested in investing in a community of tiny homes and want to bypass the waitlist, Elevate Money Inc., an online real estate investing platform, has secured the first right to purchase at least 10% of Boxabl’s monthly production of Casitas. With such high demand, this presents a significant opportunity.
The company is leveraging this advantage effectively. Elevate Money has recently launched the Future of Housing Fund, a new real estate investment trust (REIT) focused on developing and owning affordable housing communities using Boxabl Casitas. The goal is to revolutionize housing production on a massive scale, reducing costs and making housing more affordable for everyone, as shared by Boxabl Co-Founder Galiano Tiramani in a recent interview with Elevate Money.
This collaborative effort between Elevate Money and Boxabl has the potential to shape a new economy for affordable housing in light of the current real estate market conditions. Furthermore, it presents exciting opportunities for investors seeking to diversify their portfolios and tap into the modular housing sector. If you’re interested in exploring modular housing units further, consider delving into the research on the Future of Housing Fund.