A
home
available
for
sale
is
shown
on
May
22,
2024
in
Austin,
Texas.
Brandon
Bell
|
Getty
Images
When
Rachel
Burress
moved
into
her
mother’s
house
around
a
decade
ago,
it
seemed
like
a
short-term
stop
on
the
path
to
homeownership.
The
35-year-old
hairdresser
spent
those
years
improving
her
credit
score
and
saving
for
a
down
payment.
But
with
mortgage
rates
hovering
near
7%
and
home
prices
skyrocketing,
it
doesn’t
feel
like
the
mother
of
three
will
be
signing
on
the
dotted
line
for
a
place
of
her
own
anytime
soon.
“I
don’t
even
know
if
I’ll
ever
get
out
and
own
my
own
home,”
said
Burress,
who
lives
about
20
miles
outside
of
Fort
Worth,
Texas,
in
a
town
called
Aledo.
“It
feels
like
we
are
just
stuck,
and
it
is
so
hard
to
handle.”
Burress’
experience
is
reflective
of
the
millions
of
Americans
who’ve
seen
their
financial
and
personal
lives
hindered
by
elevated
price
tags
and
high
borrowing
costs
for
homes.
This
can
help
to
explain
the
sour
sentiment
about
the
state
of
the
national
economy.
It
also
sheds
light
on
an
existential
anxiety
for
many:
The
American
dream
seems
to
be
even
more
out
of
reach
these
days.
A
double
whammy
For
aspiring
homebuyers
such
as
Burress,
the
combination
of
high
mortgage
rates
and
rising
list
prices
has
left
them
feeling
boxed
out.
The
30-year
mortgage
rate,
a
popular
option
for
home
financing
in
the
U.S.,
has
bounced
around
7%
for
the
past
several
months.
It
pulled
back
after
hitting
8%
for
the
first
time
since
2000
late
last
year.
But
that’s
still
a
big
jump
from
the
sub-3%
levels
seen
in
the
early
years
of
the
pandemic
—
which
prompted
a
flurry
of
sales
and
refinancing
in
the
housing
market.
On
the
other
side
of
the
equation,
rising
sticker
prices
are
also
adding
pressure.
The
Case-Shiller
national
home
price
index
has
hit
all-time
highs
this
year.
Zillow’s
home
value
index
topped
$360,000
in
May,
a
nearly
50%
increase
from
the
same
month
five
years
ago.
In
turn,
affordability
is
down
sharply
compared
with
a
few
years
ago.
An
April
reading
on
the
economic
feasibility
of
homeownership
from
the
Atlanta
Federal
Reserve
was
more
than
36%
off
the
pandemic
high
registered
in
the
summer
of
2020.
Nationally,
the
share
of
income
needed
to
own
the
median-priced
home
last
came
in
above
43%,
per
the
Atlanta
Fed.
Any
percentage
over
30%
is
considered
unaffordable.
The
Atlanta
Fed
also
found
that
the
negative
effects
of
high
rates
and
prices
more
than
outweighed
the
benefits
from
growing
incomes
for
the
typical
American.
That
underscores
the
strength
of
these
detractors,
given
that
the
average
hourly
wage
on
a
private
payroll
has
climbed
more
than
25%
between
June
of
2019
and
2024.
‘A
tough
spot’
This
tough
environment
has
chilled
activity
for
potential
buyers
and
sellers
alike.
Theoretically,
current
homeowners
should
be
excited
to
see
their
property
values
rising
quickly.
But
the
prospective
sellers
are
deterred
by
concerns
about
what
rate
they’d
get
on
their
next
home,
creating
what
a
team
at
the
Federal
Housing
Finance
Agency
called
the
“lock-in
effect.”
There’s
already
evidence
of
this
stalling
in
the
market:
Rates
at
these
levels
resulted
in
more
than
875,000
fewer
home
sales
in
2023,
according
to
the
team
behind
a
FHFA
working
paper
released
earlier
this
year.
That’s
a
sizable
chunk,
as
the
National
Association
of
Realtors
reported
around
4
million
existing
houses
were
sold
in
the
year.
On
top
of
that,
the
FHFA
found
that
a
homeowner
is
18.1%
less
likely
to
sell
for
every
1
percentage
point
their
mortgage
rate
is
under
the
current
level.
The
typical
borrower
had
a
mortgage
rate
that
was
more
than
3
percentage
points
below
what
they
would
have
gotten
in
the
final
quarter
of
2023.
If
a
homeowner
had
instead
bought
at
the
end
of
last
year,
the
FHFA
team
found
that
their
monthly
principal
and
interest
payments
would
cost
around
$500
more.
Given
this,
co-author
Jonah
Coste
said
current
owners
touting
these
low
mortgage
rates
are
undoubtedly
better
off
than
those
looking
to
buy
a
first
home
today.
But
he
said
there’s
a
big
catch
for
this
cohort:
Moving
for
a
job
opportunity
or
to
accommodate
a
growing
family
becomes
much
more
complicated.
“They’re
not
able
to
optimize
their
housing
for
their
new
life
situation,”
Coste
said
of
this
group.
“Or,
in
some
extreme
circumstances,
they’re
not
doing
the
big
life
changes
that
would
necessitate
having
to
move.”
That’s
the
predicament
Luke
Nunley
finds
himself
in.
In
late
2020,
the
33-year-old
health
administrator
bought
a
three-bed,
two-bath
house
with
his
wife
in
Kentucky
at
an
interest
rate
under
3%.
This
home
has
more
than
doubled
in
value
in
almost
four
years.
After
welcoming
three
kids,
they’re
holding
off
on
a
fourth
until
mortgage
rates
or
home
prices
come
down
enough
to
upsize.
Nunley
knows
the
days
of
getting
a
rate
below
3%
are
long
gone,
but
can’t
justify
anything
above
5.5%.
“It’s
just
a
tough
spot
to
be
in,”
Nunley
said.
“We’d
be
losing
so
much
money
at
current
rates
that
it’s
basically
impossible
for
us
to
move.”
Most
Americans
skirt
7%
Nunley
is
part
of
the
overwhelming
majority
of
Americans
not
paying
these
lofty
mortgages.
The
FHFA
found
that
nearly
98%
of
mortgages
were
fixed
at
a
level
below
the
average
rate
of
around
7.2%
in
the
final
quarter
of
last
year.
Like
Nunley’s,
close
to
69%
had
rates
more
than
3
percentage
points
lower.
The
buying
boom
early
in
the
pandemic
is
one
answer
for
why
so
many
people
aren’t
paying
the
going
rate.
This
eye-popping
figure
can
also
be
explained
by
the
rush
to
refinance
during
that
period
of
low
borrowing
costs
in
2020
and
2021.
While
these
low
mortgage
rates
can
help
to
fatten
the
pocketbooks
of
those
holding
them,
Jeffrey
Roach,
LPL
Financial’s
chief
economist,
warned
that
it
can
be
bad
news
for
monetary
policymakers.
That’s
because
it
doesn’t
offer
signs
of
interest
rate
hikes
from
the
Federal
Reserve
successfully
cooling
the
economy.
To
be
clear,
mortgage
rates
tend
to
follow
the
path
of
Fed-set
interest
levels,
but
they
aren’t
the
same
thing.
Still,
Roach
said
that
so
many
people
being
locked
into
low
borrowing
rates
on
their
homes
helps
explain
why
tighter
monetary
policy
hasn’t
felt
as
restrictive
as
it
has
historically.
“Our
economy
is
a
lot
less
interest-rate
sensitive,”
Roach
said.
“That
means
the
high
rates
aren’t
really
doing
what
it
should
be
doing.
It’s
not
putting
the
brakes
on,
like
you
would
normally
expect.”
Low
housing
supply
has
kept
prices
up,
even
as
elevated
borrowing
fees
bite
into
purchasing
power.
That
flies
in
the
face
of
conventional
wisdom,
which
suggests
that
prices
should
slide
as
rates
rise.
Looking
longer
term,
experts
said
an
increase
in
the
volume
of
new
housing
can
help
expand
access
and
cool
high
prices.
In
particular,
Daryl
Fairweather,
chief
economist
at
housing
market
database
Redfin,
said
the
national
market
could
benefit
from
more
townhomes
and
condos
that
are
usually
less
expensive
than
typical
homes.
Townhouse
for
sale
sign,
Corcoran
Realty,
in
driveway
of
row
houses,
Forest
Hills,
Queens,
New
York.
Lindsey
Nicholson
|
UCG
|
Universal
Images
Group
|
Getty
Images
‘The
ultimate
goal’
For
now,
this
new
reality
has
created
generational
differences
in
homeownership
and
what
the
road
to
it
looks
like.
Zillow
found
that
34%
of
all
mortgage
holders
received
a
financial
gift
or
loan
from
family
or
friends
for
a
down
payment
in
2019.
In
2023,
that
number
jumped
to
43%
as
affordability
plummeted.
It’s
also
much
harder
for
young
people
to
get
on
track
for
purchasing
a
home
than
it
was
for
their
parents,
Zillow
data
shows.
Today,
it
takes
almost
nine
years
to
save
20%
for
a
down
payment
using
10%
of
the
median
household
income
every
month.
In
2000,
it
required
less
than
six
years.
“It’s
not
the
avocado
toast,”
said
Skylar
Olsen,
Zillow’s
chief
economist,
referencing
a
joke
that
millennials
spend
too
much
on
luxuries
like
brunch
or
coffee.
Olsen
said
younger
generations
should
adjust
their
expectations
around
ownership
given
the
tougher
environment.
She
said
these
Americans
should
expect
to
rent
for
longer
into
adulthood,
or
plan
to
attain
their
first
home
in
part
through
extra
income
from
renting
out
a
room.
For
everyday
people
like
Burress,
the
housing
market
remains
top
of
mind,
as
the
Texan
considers
her
financial
standing
and
evaluates
candidates
in
the
November
election.
The
hairdresser
has
continued
helping
her
mom
with
payments
on
home
insurance,
utility
bills
and
taxes
in
lieu
of
a
formal
rent.
Burress
is
still
hoping
to
one
day
put
that
money
toward
an
equity-building
property
of
her
own.
But
time
and
time
again,
unexpected
expenses
like
a
totaled
car
or
macroeconomic
variables
such
as
rising
mortgage
rates
have
left
her
feeling
like
the
dream
is
out
of
reach.
“It
is
the
ultimate
goal
for
me
and
my
family
to
get
out
of
my
mom’s
house,”
she
said.
But,
“it
feels
like
I’m
on
a
hamster
wheel.”
