Housing pain Receding prospects for the Federal Reserve to lower interest rates in the next few months are keeping US mortgage rates in the 7% range — more than double what they were three years ago. This higher-for-longer dynamic is, slowly but surely, reshaping the housing market.“ Homeownership is becoming less of a middle-class dream and more of an aspirational dream that comes with above average wealth,” says Daryl Fairweather, chief economist at Redfin Corp., an online real-estate firm. Renters say there’s a 60% likelihood they’ll never be able to own a home — that’s the highest since the New York Fed started that survey a decade ago.Just 16% of listings last year were affordable for the typical American household, according to Redfin. And as if a record median $433,558 (AU$653,000) price tag for a home wasn’t bad enough, insurance costs and property taxes have also spiked.
That unrelenting pressure has upended major life plans for US consumers and could mean staying in a dead-end job or refusing to relocate for a better opportunity, which can affect business and productivity.It’ll likely exacerbate all kinds of gaps in wealth as more people are shut out from buying houses, creating a wider chasm between those who own and those who don’t.Some of the wealthier homeowners aren’t going to escape the bite from high mortgage rates. More than 1.7 million homebuyers since 2019 bought properties with an adjustable-rate mortgage. Those loans — averaging near $1 million — are set at a rate typically lower than the prevailing 30-years for the first few years, then adjust based on current borrowing costs.Hundreds of thousands of those buyers have seen or will soon see their rates re-set at much higher levels.“Your payment’s gonna almost double and it’s not gonna be pretty,” says Chris Stearns, a southern California-based mortgage loan advisor at Thrive Loans.
