“House poor” is a common expression used to describe people who are wasting too much money on housing, leaving them with too little to spend on everything else. But it can also refer to those who are getting too little housing bang for their buck.
And now, with interest rates on home mortgages spiking faster than they have in decades, it’s getting more expensive by the moment to own a home in the U.S.
As an economist, one of my goals is to make you “house rich,” ensuring you end up with the housing you really want at the price you can really afford.
Here are some ways to lower your housing costs:
1. Shack up with the parents
Young Americans are increasingly aware that shacking up is a moneymaker. In fact, a handful are now living with their parents.
This is a massive change from the way things were in 1960, when only 29% of young people camped out with mom, dad, or both. The counterpart of this change in living arrangements is that older many Americans are living with their kids and, possibly, their grandkids.
Sure, rooming with your folks likely won’t entail proportionate sharing of dollar expenses, but if your parents or grandparents really seek your companionship, the living arrangement can be viewed as you paying your fair share of rent and them paying for your company.
The net payment is, then, what you can actually fork over for board.
2. Rent out your home
You can do this on a part-time basis. Airbnb and similar online companies have made this very easy.
A cousin of mine lives near the beach in Los Angeles. As house prices and property taxes soared, the imputed rent — or the sum of property taxes, homeowner’s insurance, maintenance, and forgone after-tax interest — became unaffordable.
One option was to sell and find cheaper housing in the suburbs. The other was to transform her garage into a studio apartment and rent out her house on Airbnb. She chose the latter route, and over five years, has pulled in enough income to significantly upgrade her studio apartment as well as the house.
Since Airbnb rents are very high in her area, she can rent her place during the year and garner the same financial gain as if she had a full-time roommate. But this arrangement gives her much more privacy and lets her rent to larger-sized families who don’t want an unfamiliar roommate while on vacation.
3. Move to a low-tax or no-tax state
There are 42 states, plus the District of Columbia, with …….