Rachel Burress, a 35-year-old hairdresser living in Aledo, Texas, has been dreaming of owning her own home for years. However, with mortgage rates near 7% and home prices soaring, her dream seems further away than ever. Burress is not alone in feeling stuck due to the high costs of homeownership that many Americans are facing today.
The combination of high mortgage rates and rising home prices has left aspiring homebuyers like Burress feeling boxed out of the market. Mortgage rates have been hovering around 7%, a significant increase from the sub-3% rates seen in the early years of the pandemic. At the same time, home prices have reached all-time highs, making homeownership less affordable than it was just a few years ago.
This challenging environment has resulted in a slowdown in home sales, as many potential buyers and sellers are hesitant to make a move. The “lock-in effect,” where current homeowners are deterred from selling due to concerns about their next mortgage rate, has contributed to a decrease in home sales. This has left many people, like Luke Nunley, feeling trapped in their current homes, unable to upsize or make necessary life changes.
Despite the high mortgage rates, the majority of Americans have fixed-rate mortgages below the current average rate of 7.2%. This can be attributed to the buying boom early in the pandemic and the rush to refinance during a period of low borrowing costs. While low mortgage rates benefit those who hold them, they can pose challenges for monetary policymakers trying to control the economy.
Looking ahead, experts suggest that increasing the volume of new housing, particularly townhomes and condos, could help expand access to homeownership and cool high prices. However, for many young people, the road to homeownership looks much different than it did for previous generations. Saving for a down payment now takes almost nine years, compared to less than six years in 2000, making it harder for young people to buy a home.
For Rachel Burress and others like her, the dream of owning a home remains a top priority. Despite the challenges posed by high prices and mortgage rates, Burress is determined to one day achieve homeownership for herself and her family. However, unexpected expenses and economic variables continue to stand in her way, leaving her feeling like she’s on a never-ending hamster wheel in her quest for a place to call her own.