Analyst says entering the market is more difficult than ever
Homes are now harder to afford for middle-class Americans all over the country as mortgage rates skyrocket, as reported in an article by Investing.com.
“It's harder than ever to buy a home. And homeownership is often the ticket to wealth for a lot of people,” said Ted Rossman, a senior industry analyst from BankRate.
A hurdle in building wealth
An analysis of the realty sector by Business Insider found that the high interest rates, which caused the increase of borrowing costs as well as the further unaffordability of homes, made it more difficult for people to build their wealth in current times.
“An inaccessible housing market spells trouble for those looking to build up their nest eggs,” said Rossman.
The average US home has appreciated by 58% in value over the last 10 years, the Federal Reserve’s data found. A study by the National Association of Realtors and Realtor.com in June further showed that 75% of homes were too expensive for buyers in the middle class.
With the current state of the housing market, around 85% of Americans said that it was a bad time to buy a home in a survey conducted by Fannie Mae in the previous month. Home sales reportedly plummeted to their lowest level seen in 13 years in September.
The Federal Reserve also found that US homeowners had an average net worth of $396,200 while renters only had an average of $10,400. This gap between homeowners and renters has continued to widen as more Americans are being priced out of the housing market. Rossman said that real estate was still an important part of becoming wealthy as most Americans had their net worth linked with owning a home.
The latest economic data by the Feds shows the continued struggle to build wealth as Americans who were in the bottom 50% in terms of their net worth earned less in the first three quarters of the year compared to the same time in 2019.
At the beginning of 2023, Americans who were part of the 0.1% had gained $1.3 trillion in wealth, while those in the bottom 50% only gained $330 billion collectively.
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