According to real estate company Redfin, purchasing a home is more expensive than it has been in at least the past ten years. Homebuyers are faced with the twin whammy of rising mortgage rates and housing prices. (Photo : by FREDERIC J. BROWN/AFP via Getty Images)
According to real estate company Redfin, purchasing a home is more expensive than it has been in at least the past ten years. Homebuyers are faced with the twin whammy of rising mortgage rates and housing prices.
For the first time this year, the average interest rate on a fixed 30-year home loan increased to 7.1%, as reported by Freddie Mac. Redfin said that for the four weeks ended April 21, the median asking price (the amount at which homeowners anticipate their house will sell) for homes in the United States increased to an all-time high of $415,925.
Can You Afford the American Dream?
With data dating back to 2015, Redfin said that the median U.S. house selling price, or what purchasers actually paid for a property, also set a record in April, coming in at $383,725. It further stated that the median mortgage payment reached a record $2,843, up roughly 13% from a year ago, as a result of sale prices and current mortgage rates.
This might also indicate that the cost of purchasing a home is at an all-time high, even though mortgage rates for purchasers in the 1980s were much higher than those for loans today. Even when adjusted for inflation, home prices were far lower than they are now, yet mortgage rates nevertheless peaked in October 1981 at 18.6%.
Challenges Mount for Buyers in the Spring Housing Market
The increased prices compound the difficulties faced by purchasers during the spring housing market. In the spring, when the weather is nicer and the days are longer, buyers visit open houses and homeowners typically market their properties during this busy season.
This year, 4.46 million existing houses will be purchased by Americans, a 9% increase from 2023. However, a lot of potential purchasers have been priced out of the market, according to experts.
Although owning a home is still the major way for American households to accumulate wealth, growing property prices have made homeownership more and more unaffordable for the typical person. According to Zillow data, Americans now need a family income of $106,500 to comfortably purchase a median home, a significant increase from $59,000 just four years ago.
There are fewer homes available for sale, which has contributed to the increase in home prices. Homeowners have been reluctant to sell because they don't want to give up their mortgages, with some having obtained rates below 3% during the epidemic. Meanwhile, construction businesses haven't kept up with the demand for houses.
According to Chen Zhao, head economist for economic research at Redfin, sellers and buyers in today's market should have reduced expectations due to the growing cost of homeownership.
