MIDDLE-CLASS FAMILIES ARE BEING PRICED OUT of the housing market amid high mortgage rates and spiking valuations, making it increasingly difficult for them to build wealth. Some financial experts say it's an environment that could lead to the end of the American middle-class dream of owning a home.
For most Americans, owning a property is key to their vision of success. It can help families create financial platforms for future generations to build on. But about 75 percent of homes currently on the market are out of reach for those in the middle class, according to the National Association of Realtors.
Interest on home loans is the highest it's been since the early part of the century, hovering around 7 percent. Mortgage costs have soared as the Federal Reserve has aggressively hiked rates to battle inflation. Meanwhile, the supply of homes has dwindled due to a combination of underbuilding and sellers who are sitting out the market, unwilling to give up low rates they secured in years past, which in turn has pushed up prices.
This dynamic, analysts say, has made buying a home the most expensive it's been this century.
Down payments are higher, monthly mortgage payments are exorbitant and few affordable options exist for middle-class Americans.
"The biggest asset most people are ever going to own is a home," Nicole Bachaud, a senior economist at Zillow, told Newsweek. "Homeownership is really that financial key that helps unlock stability and wealth preservation across generations." Simply making mortgage payments adds to the wealth of households every month, economists say.
"Buying [a] home essentially forces you into [a] savings plan," Danielle Hale, the chief economist at realtor.com, told Newsweek. "When you pay your mortgage, you're paying down some of the debt.
Denne historien er fra December 29, 2023-utgaven av Newsweek US.
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Denne historien er fra December 29, 2023-utgaven av Newsweek US.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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