How Homes Became TWICE as Expensive

Home affordability has significantly decreased in recent years, making it harder for first-time buyers, yet building wealth outside of homeownership remains a viable path through financial discipline.

• Home affordability has drastically declined, impacting first-time buyers.

• Prioritize personal financial readiness over rushing into homeownership.

• Discipline in saving and investing, not just high income, builds wealth.

The median age for first-time home buyers has risen to 38, reflecting a drastic decline in housing affordability; only 20% of homes are affordable for a $75,000 household income in 2025, compared to 50% in 2019. While homeownership is challenging, it is crucial to avoid rushing into a purchase and instead prioritize personal financial goals. Building wealth does not require homeownership, emphasizing the importance of saving and investing disciplinedly regardless of income level.

Declining Home Affordability

• 00:00:00 The median age for first-time home buyers has risen to 38, up from 31 a decade prior, indicating that fewer young people are entering the housing market. This shift is due to a dramatic decrease in home affordability, where a household income of $75,000 could afford half the housing market in 2019 but only 20% in 2025. Even with a $100,000 income, affordability dropped from 65% of inventory to 37% in the same period, highlighting a significant challenge in today's housing market.

Rethink Homeownership Urgency

• 00:02:22 It is advised not to rush into buying a first home, as ownership should align with individual life circumstances and financial goals, not societal expectations. There is nothing wrong with recognizing that home affordability in a particular area may not be favorable, especially when considering rent versus ownership costs. Rather than forcing a purchase, focus on building financial assets outside of homeownership to create more opportunities in the future.

The 3-5-25 Rule

• 00:03:20 For those committed to homeownership, the '3-5-25 rule' provides a sound financial framework: a down payment as low as 3% is acceptable, plan to stay in the home for at least 5 years, and ensure total housing costs are less than 25% of gross income. Adhering to this rule can help buyers navigate a difficult housing market and establish a stable financial situation. This rule promotes responsible purchasing decisions tailored to personal capacity.

Income vs. Wealth Building

• 00:04:04 Income only explains 30% of net worth, emphasizing that high income alone does not guarantee wealth without financial discipline. Many people spend every dollar earned, preventing wealth accumulation, as it is more about how much money is kept and invested than how much is made. A significant portion of 'Abound Wealth Management's' working-age millionaire clients have household incomes under $100,000, demonstrating that consistent savings and investments, even small ones, are key to building substantial portfolios over time.