Learn why you likely won't be buying a house anytime soon.
Buying a home is a large part of what makes up the quintessential American dream. Individuals strive for homeownership as a means to highlight their financial aptitude and stability. Some seek to own a home to attain a personal goal. When it comes down to it, owning a home means a whole lot to a whole of people. Unfortunately, for those in the market to buy a place at present are in for a rocky road at best. Due to a perfect storm of factors, buying a home is almost impossible right now.
First and foremost, a big problem with the housing market right now is that the market itself is absolutely flooded with prospective purchasers without enough houses to go around. Why does this make it hard to buy a house? The obvious answer is that there is not enough supply to meet demand which means that automatically some people will be left house-less even if they are ready to buy. However, because there is not enough supply to meet demand, housing prices are appreciating at an accelerated rate. For instance, in December of 2020, the median price for a home in the United States was just shy of $310,000. Currently, it’s sitting at $357,300. Hence some people will be pushed out of the market entirely due to exponential housing price increases.
What’s more, is that in a seller’s market such as this, not only are listing prices far higher than they were a year ago, but those list prices are likely not even what the house will ultimately end up selling for. Again, because supply is not meeting demand in this flooding market of prospective homeowners, people are willing to pay above the house’s list price in order to get the home that they want. This often leads to bidding wars which ultimately result in many losing out on the home that they wanted. This makes buying a home even more difficult than it already is.
Moreover, further hindering someone’s chances of buying a home are soaring mortgage interest rates. During the height of the pandemic, interest rates had bottomed out to their lowest levels in decades. Now they are topping the charts at over 5%. That’s a big number, especially when it comes to buying a home because it serves to increase buyers’ overall mortgage payments by a substantial amount. Gabriela Raimander, a Florida real estate agent, conveyed that when potential buyers realize how much their mortgage payments will increase due to high APRs on their mortgages, many of her clients get disheartened by the fact that what they thought was attainable is all of the sudden not. Raimander says many of her clients walk away saying ” ‘I just can’t compete in this market. My dream of owning a house will have to be postponed or shelved altogether.’”
The good news, though, is that even though buying a home might look impossible right now for a myriad of reasons, things may improve. For instance, high interest rates should deter some buyers. This may help to alleviate the supply and demand issue. If supply and demand level out, then it stands to reason that prices will, too. That could create a better opening for more people to have the opportunity to own a home. At this point, however, it’s still a waiting game.