Homebuyers Now Require $117K In Annual Income To Purchase A Median-Priced U.S. Home — Up Nearly $20K From Last Year. Here's A Cheaper Way To Invest In Residential Real Estate

High interest rates can cool down the housing market. Yet despite the Federal Reserve's aggressive rate hikes, homes aren't getting more affordable.

The median existing home price in the U.S. was $375,400 in March 2023, according to The State of the Nation's Housing 2023 report from Harvard University's Joint Center for Housing Studies. The amount represented a 1% decline year over year.

But with the impact of higher interest rates, the monthly mortgage payment on a median-priced home in March was $2,300, up 29% from the $1,780 a year ago.

Homeowners are on the hook for more than the mortgage payment. The Harvard researchers estimated that after factoring in property taxes and insurance, the total monthly ownership cost for a median home in the U.S. would be $3,000.

To afford such a home, you'd need an annual income of $117,100, according to the study. A year ago, the annual income required to afford payments on a median-priced home was $97,400.

And that means millions of households are now priced out of the market.

"The number of renter households able to afford these higher payments shrunk by 32%, from 7.5 million to 5.1 million, a loss of 2.4 million potential homebuyers," the study said.

Trending: This REIT just teamed up with the company that built Elon Musk's tiny house to develop affordable housing communities. Here's how you can be among the first to buy shares.

Tiny Homes To The Rescue?

While housing affordability remains a pressing issue in America, new companies are addressing the challenge by innovating ways to build homes.

For instance, some companies have been making prefabricated modular housing units.

Boxabl is one of them. Its first product — the Casita — is a tiny home that comes with plenty of features, including a full-size bathroom, kitchen, appliances, tall ceilings and big windows. Coming in at 361 square feet, the Casita can be assembled in an hour and starts at around $50,000.

Sound like a good deal?

Many people believe so. According to Boxabl, there is a waitlist of over 170,000 for the Casitas.

Even Tesla Inc. CEO Elon Musk owns a Casita. The billionaire said he uses the tiny home as a guest house.

And there could be a way to skip the waitlist if you want to invest in a community of tiny homes.

Online real estate investing platform Elevate Money Inc. has partnered with Boxabl, securing the first right to purchase a minimum of 10% of Boxabl's monthly production of Casitas. Given the long line of people eagerly waiting their turn to buy these tiny homes, this could be a significant opportunity.

The company is putting this advantage to good use. Elevate Money just launched its newest real estate investment trust (REIT) — the Future of Housing Fund — to develop and own affordable housing communities populated by Boxabl Casitas.

"What we are trying to do is turn on the largest scale mass production of housing ever done so that we can really push the costs of housing down and make housing more affordable to everyone," Boxabl Co-Founder Galiano Tiramani said in a recent interview with Elevate Money.

Given the current real estate market conditions, the partnership between Elevate Money and Boxabl could create a new economy for affordable housing.

At the same time, this collaboration has the potential to open up exciting opportunities for investors. If you are looking to diversify your portfolio and tap into modular housing units, you might want to do a bit more research on the Future of Housing Fund.

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