How To Afford a House These Days
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Feb 3, 2024
- 201 comments
How To Afford a House These Days
An MMM reader recently shared their thoughts on our blog’s principles of FIRE (Financial Independence, Retire Early):
“While I still find some of MMM’s advice relevant, it seems like every FI blogger out there worked in tech 20 years ago, pulled down a 6-figure salary, and bought a house for a bag of potatoes before 2019.
I wasn’t smart enough to find FI when I was young so I sometimes feel like a lot of their advice is not going to help me or others who don’t already own a home and don’t have six-figure salaries in this post-pandemic world.
A lot of the ideas given to young folks are ‘house hack’ and ‘buy a fixer upper’ but that is still out of reach and/or complex to navigate with current prices and interest rates. Most townships around me do not want you to chop a house up into ADU’s or multiple units. My cousin owns 60 acres of land but he is not allowed to live on a trailer on that land.”
Reflecting on the Criticism
I contemplate this critique, weighing whether any Mustachian principles have become obsolete, or if it’s more a case of Complainypants and Excuse-itis at play.
Fire has faced many such challenges throughout history:
- Written off as a phenomenon of the 2000 Tech Boom
- Declared obsolete after the 2009 Financial Crisis
- Dismissed as a temporary fluke of the 2010s stock market
- Explained away as a Covid-era side effect
Current Scenario
Our reader’s concerns focus on two main points:
- High salaries in tech and other fields remain a factor.
- Rapid house price increases and rising interest rates over the past four years.
High Salaries
I don’t expect high salaries to change significantly. Some jobs simply pay more, and there’s always room to increase income and switch careers. However, MMM typically emphasizes living joyfully and efficiently, reducing waste, and managing money wisely, regardless of income level.
Housing
Does the current housing market make FIRE plans impossible?
Let’s examine the data:
- US house prices (adjusted for inflation) are about 25% higher since 2019.
- This translates to houses feeling approximately 10% more expensive relative to average salaries and the price of other goods and services.
Conclusion
While the housing market presents challenges, Mustachian principles remain valuable. Focus on streamlining spending, living efficiently, and managing money wisely, and you can navigate these times successfully.