Dennis Shirshikov made $135,000 a year, but it still wasn’t enough to buy a home in New York City.
He and his wife, Natalie, were longtime renters of a one-bedroom apartment while paying down personal and student-loan debt. And then they had a baby, and in quick succession, two more.
A pandemic renter-assistance program and a larger-than-anticipated tax return made homeownership seem accessible for the first time — but certainly not in New York City. The family made the jump to a town in upstate New York, in the middle of what Shirshikov calls “dairy country,” where they were able to purchase a seven-bedroom home for $175,000.
In a March poll by Bankrate, 43% of respondents who don’t own a home cited their income as the factor that most holds them back from homeownership. And that’s not surprising, given how the growth in American home prices has run laps around the growth in Americans’ incomes. A recent analysis from the real-estate-resources website Clever found that, adjusted for inflation, average home values have skyrocketed 118% since 1965, while the median household income grew just 15%.
On top of that, remote work has freed high earners to move to locations that more suit their lifestyle and budgets — but that also comes at the price of pushing up home values and shutting lower-earning locals out of the market.
It’s even worse now. Home prices jumped 41% between January 2020 and July 2022, as Americans rushed to take advantage of rock-bottom lending rates. But as mortgage rates rise, the market hasn’t yet responded with unilaterally falling home prices. Instead, a new report from the National Association of Realtors found that competition for properties is still fierce, with nearly 40% of homes still commanding the full list price.
Inflation and the increased cost of services like childcare only add to the financial burden of homebuying. Brian Koss, the executive vice president of Mortgage Network, said buyers are now bowing out of purchase agreements at the highest rate since 2020. That’s due, in part, to buyers having more bargaining power as homes sit on the market longer, but it’s also because mortgage rates have spiked, requiring borrowers to make payments that are roughly 40% more than a year ago, according to Redfin.
In short, a healthy salary alone isn’t enough to purchase a home these days. Sacrifices are often critical to the homebuying process, whether it’s waiting it out for sunnier financial times, moving to a less expensive location, or reeling in spending in order to build up a financial nest egg. Here’s how three buyers faced the reality of homeownership, and the steps that led them to purchase or continuing to rent.
Amanda Ghanbarpour and her family landed in Boston in September 2021 when her husband nabbed a postdoctoral associate position at the Massachusetts Institute of Technology. It wasn’t their original plan, though. Coming off of a different postdoc at Yale University, the Ghanbarpours had put into motion plans to move to Portland, Oregon. They put down a small deposit on a house. Ten days before closing, the MIT opportunity came through. The Ghanbarpours rerouted.
The couple, both in their early 30s, and their now 2-year-old daughter ended up in an East Boston two-bedroom rental that cost $2,250 a month.
“We wanted to have a pretty decent quality of life,” Ghanbarpour, who works as an internal communications specialist at a financial-services company, said. “Our max was $2,500 for rent, and that’s just really slim pickings here.”
Her husband’s academic career keeps the family nimble in terms of their location, but the ultimate goal is to settle down and purchase a house.
“It hurts to put so much money down for rent every month,” Ghanbarpour said. “You know, when you feel like it’s kind of throw-away money.”
The Ghanbarpours don’t have any student debt. Ghanbarpour paid off her undergraduate loans before the two got married in 2016, and the financial-services company she works for covered her master’s degree. Ghanbarpour’s husband completed his undergraduate and master’s degrees in Iran, so he incurred no debt. His Ph.D. was funded, Ghanbarpour said, and the fellowships are paid positions.
Together, the Ghanbarpours bring in over twice Boston’s median household income of $76,298.
While the Ghanbarpours felt comfortable purchasing in Portland, where the median home listing price is $565,000 according to Realtor.com, they haven’t been able to make the jump in Boston, where the median home listing price is $799,000.
Ghanbarpour said she thinks their small family will have to go farther afield into the suburbs if they want to purchase something that meets their criteria and budget. For now, as they settle in and figure out their next steps, buying is off the table.
Dennis Shirshikov, 32, and his wife, Natalie Bakman, 28, were making ends meet in their $2,500 one-bedroom apartment in Flushing, Queens, a New York neighborhood far from the bustle of Manhattan.
“We weren’t struggling or anything, but to say that we were able to put away any money was a stretch,” Shirshikov said.
In 2018, he was working as a specialist for the real-estate investing company Awning, making a salary of $135,000 — about twice New York City’s median household income at the time. His wife, a veterinary technician, wasn’t pulling a salary as she logged the 2,000 hours she needed to apply for a doctoral program.
The couple was contending with student loans and personal debt of about $160,000. Their first child was born in January 2019, and two others followed in August 2020 and December 2021. To keep childcare costs down, Natalie became a stay-at-home mom. When the pandemic hit and Shirshikov’s work went fully remote, he said that “a one-bedroom apartment started feeling kind of cramped.”
New York City’s eviction moratorium during most of 2020 and 2021 helped the couple reroute their rent payments to paying down some of their debt. Through a program with the city, Shirshikov applied to have those missed rent payments forgiven and was freed of over $30,000 in back rent. On top of that, a larger-than-expected tax refund of about $13,000 made Shirshikov optimistic that homeownership was on the table.
But they would have to leave New York City, where the median home price stands at around $777,000.
The family decided to move to a town near Binghamton, a three-hour drive northwest of the city. Their dollar went further there, and in May they were able to purchase a former bed-and-breakfast with seven bedrooms, built in 1851, for $175,000.
They put down $12,000 and opted for seller financing, which allows them to pay back the seller in increments over a period of 20 years rather than taking out a mortgage from the bank. The student loans and personal debt had affected their credit scores, so it made sense to them to choose seller financing.
Their mortgage payment hovers around $1,800 a month. Including taxes and insurance, the monthly cost is about $400 less than their New York rent.
It’s been worth it for Shirshikov. He noted that when he, Natalie, and the three kids go into the city to visit family and friends, they finally “have the money to do things.”
Metzli Sanchez wasn’t in the market for a home this year. It isn’t something she thought she could afford, especially at 25, and after being briefly homeless a few years earlier.
“If you told me in January I was going to be a homeowner by the end of the summer, I would have laughed in your face,” Sanchez, a closing coordinator for the real-estate-technology website OJO Labs who lives in San Antonio, Texas, said.
Sanchez’s frugal spending habits were shaped by her tumultuous adolescence.
“Growing up, money was always tight, and things were really, really unstable,” she said.
Since graduating from college debt-free in 2018 — she got a full ride to Texas A&M University — Sanchez has been picky about what she spends her money on.
A rental she shared with a roommate in Round Rock, Texas — a cheaper alternative about a half-hour drive from Austin, where her employer is located — ran her $800 a month, which Sanchez admits is below what she could afford after a stint with Dell and at OJO. Sanchez declined to give her income for privacy reasons, but confirmed that it’s higher than the per capita income of $41,957 in 2019 in Austin.
Sanchez was able to get on the path to homeownership thanks to a company initiative that sets up employees to buy homes through an OJO Labs’ platform that matches buyers with real-estate agents and mortgage brokers. She decided to purchase in her hometown of San Antonio, which is about an hour-and-45-minute drive from Austin.
It doesn’t hurt that the median home price in San Antonio is $319,900, according to Realtor.com — less than half of Austin’s $650,000.
Sanchez put an offer on a $185,000 house, and settled in mid-July for a $175,000 home with a $5,250 down payment. She has a Federal Housing Administration loan, which is a loan ensured by the Department of Housing and Urban Development and is geared toward borrowers in less-than-stellar financial situations. Her $1,500-a-month mortgage payment includes property tax and insurance.
“When I bought this house, this is, for me, healing my inner child,” Sanchez said. “This is giving myself what I needed, and being the person that 9-year-old Metzli needed.”
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