As interest rates in the US remain higher for longer, the American Dream of affordable homeownership is unattainable for longer — and maybe for good.
Perhaps more than anything else, mortgage rates are the single biggest factor that determine one’s economic mobility in the US. Mortgage rates have been hovering around 7% for over a month — more than double what they were three years ago — and many were counting on them coming down as inflation rapidly retreated toward the end of last year. But price growth ramped back up again to start 2024, and now the Federal Reserve is keeping rates at a two-decade high for the time being.
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. While owners benefited from a
$1.3 trillion home-equity windfall in 2023, renters saw costs remain high, pandemic savings dry up and household debt rise.
And all of this, of course, is top of mind for voters who are largely downbeat on the economy heading into November’s presidential election.
The numbers are pretty bleak. 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 the survey a decade ago. Just
16% of listings last year were affordable for the typical American household, according to real estate brokerage Redfin Corp. And as if a record median
$433,558 price tag for a home wasn’t bad enough, insurance costs and property taxes have also spiked.
