First-time homebuyers looking for help might be frustrated for a few more years with high mortgage rates and even higher home prices. Various economists are convinced that the U.S housing market is stuck and we are not convinced it will become unstuck until 2026 or later.
“This will take many years to work itself out. There isn’t a magic fix,” said Michael Gapen, head of U.S economics at the Bank of America. “The message for first-time homebuyers is one of patience and frustration.”
Housing affordability is a major problem in America, and during COVID-19 the Fed’s mortgage rates surging home prices have spiked. These two facts have made it historically unaffordable to buy a house. It’s been a weird combination. Mortgage rates rose substantially but so did home prices. That typically doesn’t happen.
Many are finding that the supply of homes cannot keep up with the demand, and prices have done nothing but go up. One of the major problems home buyers are facing is the “lock-in effect” which is hurting supply. Many who already own their homes are essentially locked into their property from when mortgage rates were super low.
Now that home prices and rates have gone up it doesn’t make sense for many of them to move and lose out on their low mortgage rates. Why would I sell unless I have to?” said the head of U.S economics at Bank of America Micheal Gapen. “Prices have gone up and the mortgage rate is a lot higher. So I’m content to stay where I am.” Finally, we would like too add that this article is based in economic facts of june and july of 2024.
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