These Are the Sacrifices Every Generation Makes To Afford Housing
With interest rates so high, housing payments have been squeezing Americans more than ever. Housing costs are so expensive that half of American homeowners and renters have admitted to struggling at times with their payments, according to a recent survey from Redfin, the online real estate broker. Many people skipped meals, dipped into retirement savings and sold their stuff to make housing payments.
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Here’s a look at the most common sacrifices people have been making to afford housing.
How Expensive Is Housing?
Before analyzing the top sacrifices to afford housing, it’s important to understand what’s causing this situation. Another report from Redfin indicated that the average household earns about $30,000 less annually than is needed to afford the median-price home.
The national median mortgage payment reached $2,194 in February, according to the Mortgage Bankers Association (MBA). The median rent went up to $1,987 in March, which was a 0.77% annual increase, according to Rent.com.
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What Are the Top Sacrifices Made To Afford Housing?
Redfin surveyed roughly 3,000 homeowners and renters to find out the top sacrifices people made to afford a housing payment — rent or mortgage:
Took less or no vacations: 34.5%
Skipped meals: 22%
Worked extra hours: 20.7%
Sold their stuff: 20.6%
Borrowed money from friends and family: 17.9%
Dipped into retirement savings: 17.6%
Delayed or skipped medical treatments/healthcare: 15.6%
Others noted that picking up side hustles or receiving monetary gifts helped with their housing expenses.
While skipping or limiting vacations may not be concerning, skipping meals and working longer hours could lead to other issues.
The Top Sacrifices by Generation
Here’s a look at the top sacrifices of every generation — and what this says about their financial state.
Skipping or Eliminating Vacations
42.8% of baby boomers shared that they skipped vacations, which is a sign that they may be forced to make cutbacks in retirement. The report also found that 31.3% of millennials and 36.8% of Gen Xers skipped vacations to afford housing.
The fact that skipping vacations is a top sacrifice of three generations indicates that people are feeling the squeeze when it comes to housing payments and are doing whatever they can to get by. While the idea of skipping a vacation doesn’t seem daunting at first glance, the concern is that this could lead to burnout.
Dipping Into Retirement Savings
Baby boomers struggling with housing payments would most likely rely on their retirement savings after skipping trips. With 27.5% admitting to dipping into their retirement accounts to make their payments, this could lead to financial consequences as they struggle to transition to retirement living in their golden years.
Other Sacrifices
Gen Z’s sacrifices differed — about 27% admitted to working more hours, selling their stuff and skipping meals. Younger people have accepted that they must work longer hours, have fewer luxuries and skip meals to make housing payments.
Advice for Those Struggling To Afford Housing Payments
If you’ve been struggling with housing payments lately, there are a few things that you may want to consider about making these sacrifices.
Dipping Into Retirement Savings
The biggest issue with relying on retirement savings is that you’re hurting your future self, which could impact the quality of your lifestyle in your golden years.
“When it comes to sacrificing retirement savings to afford a house, it’s never a good idea,” said Yancy Forsythe, a licensed real estate agent and the owner of Missouri Valley Homes. “Compromising retirement security can lead to significant financial challenges later in life.”
Skipping Vacations
Even though vacations give you something to look forward to, they may have to be a necessary compromise during these challenging times.
“Vacations are a significant sacrifice for homeownership,” said Forsythe. “But investing in a home can offer long-term benefits that far outweigh temporary pleasures.”
Missing Meals
The one area where making sacrifices could be a serious issue is missing meals or eating less to get by. You won’t feel motivated to work or have the energy to get much done if you’re not getting the proper nutrition.
“Cutting back on meals to afford housing is not a good idea,” Forsythe said. “It’s important to balance essential living expenses with housing costs to ensure both physical health and financial stability. Instead of skipping meals, find a way to switch up your meal plan so that you’re not spending as much.”
Working Longer Hours
Working overtime could be a temporary measure when it comes to making housing payments, but you don’t want to rely on this strategy in the long run.
Forsythe explained, “While working overtime can expedite homeownership, it’s important to maintain a sustainable work-life balance to avoid burnout and health issues.”
How To Save on Housing Costs
How can you save on housing costs to make it more affordable without sacrificing as much?
Change Your Living Situation
If your housing payments hurt you, it may be time to consider switching up your living arrangement.
“Consider downsizing to a studio apartment temporarily,” said John Gluch, a licensed Realtor and real estate coach. “This can help free up extra money toward a down payment or to save more in general.”
You could also think about renting out your spare bedroom on Airbnb or look into moving somewhere with a lower cost of living.
Try To Save on Transportation
Since housing and transportation are the major expenses for most people, you could look into cutting back on how you get around.
“Depending on where you live, it might make sense to sell your car and take public transportation or use a bicycle or car-sharing service,” Gluch said. “This can also save money on gas, insurance and any maintenance.”
Look for Ways To Cut Back in Other Areas
If you want to find the funds for your housing payments, you can also look into other expenses that are putting a dent in your budget.
“Take a look at monthly subscriptions or streaming services, because cutting these out temporarily can also free up money to put in savings,” said Gluch.
You could be spending more money on subscriptions than you realize, and it’s time to ensure you’re only paying for services you get value from.
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