I was recently dumbfounded when I found out that a townhome costing $350,000 with homeowners association (HOA) fees included was only going to cost $3,800 total. I thought I had an above-average income at $120,000, yet I couldn’t even afford this. Was everybody making a lot more money than me, or what was the deal? It turns out, it’s all about the interest rates. Even a quarter point can make a huge difference, and when rates are multiple points higher than they were this time last year, purchasing power is greatly reduced. Furthermore, home prices haven’t dropped in correlation with rate hikes like many people expected, making it almost impossible for many to afford a decent home. It’s a tough time to be in the market right now, so just be patient.
I know this firsthand, as I took out a $420,000 mortgage a couple of years ago with no HOA fees, but my monthly payment is $2,600 and that already includes taxes and insurance. At the time, I was only making $120,000, but even that wasn’t enough. I’m seeing a real increase in multigenerational living these days. Even if one person is the one taking out the loan, sometimes they’ll have extended family living with them and helping to cover the mortgage. I have some neighbors around the corner who are doing just that – there’s so many of them that they can’t even fit all their cars in the driveway, and they’re blocking the sidewalk. Roommates are also a common solution, as having dual incomes has changed the game.
At the end of the day, your HOA fees really do make a difference in how much you’re paying for a home. It’s important to do your research and find a home that you can afford while still living comfortably.