With the Fed once again raising rates and the prices for housing showing only very moderate signs of cooling down in a few select markets, many young people feel that homeownership will forever be out of reach.
The traditional home with a white picket fence, in particular, is getting to be a rich person's fantasy by the minute – between 2021 and 2022, average prices for a single-family home rose by 15.7% to $368,200 across the U.S. In many New York, D.C. and California suburbs, one would be looking at upwards of one million for a starter home.
Mobile Home Or Condo In The Suburbs?
There are, of course, options for those who want to get into the market but cannot afford a single-family home. A recent report by Realtor.com found that the mobile home is the most affordable option with a median listing price around $150,000.
According to Realtor.com's calculations, a median home currently commands $425,000.
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While some may cling to certain stereotypes around the mobile home, associating it with poverty and low education, the average one in the U.S. rose in value by 30.4% between 2021 and 2022. That made them a better investment than a single-family home.
"It's something that many more people have looked to as an affordable option," Dave Anderson, executive director of the National Manufactured Homeowners Association, told Realtor.com.
Condominiums or townhomes have long been viewed as an alternative way to get "one's own little something" and start building equity. However, the fact that many are built new makes them more expensive — the combined median list price nationally for a townouse and condo is $435,000. They appreciated by 20.8% year-over-year in 2022.
But compared to mobile homes, they are much easier to find — condos and townhomes make up 17.2% of Realtor.com's housing stock while mobile homes are only at 2.2% and predominantly in warmer states like Florida.
Single-family homes, meanwhile, make up a whopping 77.2% of the market due to the way the country was historically settled.
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Multifamily Only Makes Sense As An Investment
Multifamily homes are hardly affordable but also one option. While the median price is currently $499,900, this encapsulates a wide range that could be a huge building or a townhome with two adjoining apartments that owners can rent out as a source of supplementary income.
Multifamily homes grew in value by only 11.1% year-over-year but are an alternative for those who have a long-term vision of entering the rental space.
Chicago and Buffalo, New York are two cities where these types of properties are very common.
"You're investing in your community, your housing, your neighbors," Buffalo real estate broker Vinny Rondinelli told Realtor.com. "It's a more fulfilling investment than stocks and bonds." (That last statement should be taken with a grain of salt as it really depends on whom you ask.)
Nothing Is Affordable! What Do I Do?
As the prices show, none of these homes stray too far from the median and affordability is a constant problem.
But the point is that the most relatively affordable property can be a jumping-off point for those who want to start build equity as soon as they can — something that, seeing how fast home prices are growing, many are desperate to do despite concerns over a real estate crash.
"When you own a home, no matter what type that is, you're able to build up equity, which increases your wealth," Realtor.com Chief Economist Danielle Hale said in a statement. "If these other types of homes—which are generally more affordable than single-family homes — can help you get your foot in the door and start the process of building wealth for yourself, then they're worth considering."
