As interest rates in the US remain higher for longer, the American Dream of affordable home ownership 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 per cent - more than double what they were three years ago - and many were counting on them coming down as inflation rapidly retreated towards the end of 2023. 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.
The numbers are pretty bleak.
Renters say there's a 60 per cent 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 per cent of listings in 2023 were affordable for the typical American household, according to real estate brokerage Redfin. And as if a record median price tag of US$433,558 (S$585,000) for a home wasn't bad enough, insurance costs and property taxes have also spiked.
It's so bad, everyone from leading economists to the country's top leaders have bemoaned that the market is "almost impossible" for some home buyers to crack.
"Owning a home is a status symbol. But once a status symbol becomes so expensive, people start to reject it as being something that's worthy of striving for," Redfin chief economist Daryl Fairweather said. "Home ownership is becoming less of a middle-class dream and more of an aspirational dream that comes with above average wealth."
BETTER TO RENT
Historically, those able to afford the upfront costs of buying a home were able to lock in a cheaper monthly housing bill including property taxes, insurance and mortgage payments - than renters.
Denne historien er fra June 09, 2024-utgaven av The Straits Times.
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Denne historien er fra June 09, 2024-utgaven av The Straits Times.
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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