Rapid increase House price According to George Ratiu, senior economist at Realtor.com, mortgage rates have risen and “affordable caps” have been created, especially for first-time homebuyers.
“For many buyers, the current market conditions are, in a sense, literally and figuratively closing the door to home ownership in the short term,” Latiu told the FOX business.
Due to a variety of factors, first-time buyers are in a particular pinch. In addition to inflation rising to its highest level since November 1981 last month, home prices rose nearly 17% year-on-year.
In addition, most people raise money for their homes, and mortgage rates do not benefit future buyers.
According to mortgage buyer Freddie Mac 30-year fixed mortgage interest rate As of July 21, it rose to 5.54%, up from 5.51% a week ago. A year ago, the 30-year fixed mortgage rate averaged 2.78%.
According to the Ministry of Labor, wage growth has increased and, despite a 4.8% year-on-year increase in the private sector, people are actually declining after taking into account inflation, which reached 9.1% in June.
Latiu Calculated mortgage payment Realtor.com average priced home in June. According to Ratiu, for a home with a down payment of 20% and a fixed mortgage rate of 30 years, the mortgage rate would be around $ 2,100, up almost 60% year-on-year.
“”These soaring costs It leaves many first-time buyers with a shrinking set of housing options, deepening the ongoing crisis of affordability for homes. ”
Looking further, according to Ratiu, households that earn $ 75,000 a year could buy 23% of the homes listed on Realtor.com in June. In June 2018, if the same household earns $ 75,000, they may be able to buy 46% of the homes listed on Realtor.com.
Ratiu noticed the same trend, even if you jumped up the income class. Households that earn $ 150,000 can afford 59% of the homes listed on the site last month, starting with 78% in June 2018.
In the future, signs of market rebalancing are beginning to appear.
Existing home sales have declined over the past five months, while new home sales have fallen for the sixth straight month, according to Realtor.com data.
However, more homeowners are bringing their homes to market. Supply shortage According to Ratiu, this was the main challenge.
Housing is also beginning to stay in the market for a long time because interest rates are so high.
“We are beginning to see signs of market rebalancing,” said Latiu.