A financial life coach who earns more than six figures has revealed that despite his salary, he cannot afford to buy a home in an area with a high cost of living.
TikToker and personal finance expert Tawnya Schultz (@tawnyaschultz) encouraged others to only look into homeownership if they're ready.
The content creator lives outside the Bay Area in Lake Tahoe, California, and brings in $200,000.
So last fall, she tried unsuccessfully to close on a home deal.
She was originally under contract for a $760,000 property, but the seller ultimately backed out of the contract after a rigorous review of her qualifications.
“I was eligible for up to $600,000 and he was going to lend me the rest so I could afford a house…he decided it wasn't wise,” she said. Ta.
The 41-year-old is instead continuing to rent, spending $1,700 a month on a four-bedroom place a few miles from the Bay Area.
“It's really good for the area. I have a good relationship with the landlord, so she won't raise any issues with me,” she said.
Tonya admitted that there were times during her search when she saw the interest rates on homes in the San Francisco area and was disappointed.
“I think once you grow up and reach six figures in height, you'll be able to do everything you thought you could do,” she said.
“The reality is that home prices have skyrocketed over the past three to four years during the pandemic, so you need to save up for a bigger down payment.”
Experts explained that in addition to the challenges created by the pandemic, it is already generally much more difficult for Millennials and Gen Z to buy a home compared to older generations.
According to the U.S. Census Bureau, in 1960 the median home price was $11,900, the median income was $5,600, and the price-to-income ratio was 2:1.
This gap has widened dramatically in recent decades, with the median home price in 2019 being $240,500 and the median income being just $68,703. was 3:5.
Not only that, Tawnya said, the price-to-income ratio varies widely depending on where you live.
Although it has been several years since she earned more than six figures, the coach explained that at one point she was still considered low-income in California.
According to a report released by the California Department of Housing and Communities, a single person is considered low-income if their income is $104,400 or less.
Despite the failure to buy a home, there is no need to rush back into the housing market, the finance coach said.
“My goal now is to save another $50,000 to $75,000 over the next year or two, and I'm hoping interest rates will come down by then,” she said. .
For prospective homeowners, Koch urged them to take steps to ensure financial security to avoid housing poverty.
“Some people spend 50% of their income paying for housing, which can quickly put them into poverty,” she says.
In addition to saving, Tanya explained that it's important to pay down consumer debt such as credit and student loans and have realistic expectations about what you can afford.
Not only that, the coach also urged prospective applicants to make sure they have funds for discreet fees and home repairs.
“Know all costs up front, such as homeowners insurance and HOA fees, because these are all additional charges on top of that,” she advised.
Tonya doesn't plan on buying a home anytime soon, she explained, but is content to continue renting in the meantime.
“I recommend that it's okay to continue renting until you're completely ready and have money saved up,” she said.
“Renting isn't about throwing away money; it's an investment in your future.
“And until you really decide where you want to live, owning a home may not be the right decision at this time.”
