October 11th 2023.
The issue of homeownership becoming unattainable for many Americans has recently been highlighted in the news. As BLACK ENTERPRISE reported, the Federal Reserve's adjustment of interest rates has had a negative effect on the home market. A report from Fortune sheds more light on this problem, stating that it would take a 55% increase in pay, a 4% decrease in interest rates, and a 35% decrease in home prices for homeownership to be attainable for most.
Andy Walden, Vice President of Enterprise Research at ICE Technologies, commented on the situation by saying that such massive movements are unlikely to happen in isolation. Sam Khater, Chief Economist at Freddie Mac, also weighed in on the matter, adding that the lack of inventory is the biggest issue at hand. Zillow's data shows that the average price of homes listed increased by 4% between July and August, but this does not mean that the housing market is about to improve anytime soon.
Walden said that it is crucial to monitor the inventory data closely in order to get an idea of where home prices are going. Data from Black Knight, now owned by ICE, reveals that a quarter of new home buyers are paying at least $3,000 a month on their loans for their new homes. This means that they are paying $800-$1,000 more a month on top of already spending 60% of their income on mortgages alone. It is clear that the cost of homeownership is too high and this is especially true for Black and Latino Americans, whose rates of homeownership were 25% lower than those of white homeowners in 2022, according to Harvard's Joint Center for Housing Studies.
The end of pandemic-era housing assistance programs has only exacerbated the situation, and unless the factors driving up the cost of homeownership are addressed, the trend of fewer people actively searching for homeownership is likely to continue.
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