This “funny” meme perfectly captures the skewed perception of the housing crisis

I came across a meme recently that didn’t look quite right, and I decided to sit down and do the math. The meme reads: “HGTV house-hunting couples are like: ‘I work part-time at a children’s museum and my husband rescues pigeons for a living…our budget is $325,000.’”

That will sound about right for most homeowners, with the average home sale in the US at over $400,000, but for renters it seems like an obscene amount of money. Homeowners mistakenly believe that rent is cheaper, and renters have been brainwashed to think that homeownership is too expensive and out of reach. But when it comes to monthly housing costs, you might be surprised to learn that homeownership is actually cheaper than renting.

When you consider the factors that contribute to the monthly cost of owning a home, the couple in this example would only pay around $1,275 per month. By contrast, 29 states have a median rent price of over $1,000. (States vary widely, and there are also disparities within states that skew these averages.)

Let’s go over the numbers using the example above and some averages from easily found resources.

(Please note that amounts have been rounded for readability.)

Monthly cost of owning a home

In our example, the sale price of the home is $325,000.

The average homeowner’s insurance rate is based on the home’s value at $3.50 per $1,000. Assuming the value of the home is about the same as the sale price, the annual cost of their homeowner’s insurance would be around $1,140 per year.

Another expense that homeowners have that are not a factor in renting is property tax. There are a few states that don’t assess a real estate property tax, but most states use property taxes to help cover the costs of public education. Property tax is assessed annually, and the national average is $2,470 per year.

Be aware that you will be paying interest on the mortgage monthly. The average interest rate is currently around 2.929% APR, but interest is calculated monthly rather than annually. Interest and amortization schedules can be complex, so we won’t try to include this in the costs of home ownership.

To compare these figures to average monthly rent amounts, we need to break them down to a monthly housing allowance (sans utilities). Given the factors above, the couple would have a monthly housing cost of around $1,200 per month.

Average monthly rent price

The amount people pay for rent also varies across the country. Rent Café reports that the average is $1,463. You will need to pay for renter’s insurance as well, but the average is a very low $168 per year. Even without that addition, it is easy to see that owning a home with a mortgage is cheaper than renting. What’s more, renters often lease a much lower quality residence than a home listed for $325,000.

Addressing the elephant in the room — a living wage

This example brings up another issue — the lack of a defined living wage. Housing is at the top of Maslow’s hierarchy of needs. Yet there is such a wage gap between the poor and middle class that neither really understands how the other lives.

In this example, the husband works full-time “rescuing pigeons,” so I am basing this off of the average veterinary clinic. Veterinary technologists or technicians earn an average of just over $35,000 per year, which works out to just $2,900 gross per month. If you assume an average 20% income tax rate, you are looking at a net of $2,320. Their housing, after utilities are included, would easily be half of that amount monthly.

The wife works part-time at a children’s museum. Part-time can be anything from 10 hours to 38 hours, depending on the state and the organization’s own policies. Assuming the average 30 hours for part-time status, and the hourly wage of a part-time museum employee ($16.24 per hour), she would have a gross income of about $1,950, with an assumed net of $1,560.

That makes their combined take-home pay about $3,880, or only $46,500 per year.

Raising the minimum wage to $15 per hour for full-time employees only guarantees a monthly gross wage of $2,400 per month. A single person can expect to receive about $2,112 after taxes. While the jobs of this couple might seem ridiculous, they would actually be much better off than the 30+ million Americans that still earn less than $15 per hour, and half of sole-earners in that class are supporting children.

Why bother renting?

There are a lot of reasons someone will be forced to continue to rent, many of which I have faced myself. Bad credit, student loans, and an unstable work history are hallmarks of the renters getting the short end of the stick when it comes to rental home price, value, and neighborhood. Meanwhile thousands of renters with reliable income and cash in hand are being turned away for these same reasons.

Take note. It is classist inequalities such as these that we must recognize if we want to eradicate homelessness and home insecurity.