Stuck in a Starter Home
www.nytimes.com
Squeezed by high interest rates and record prices, homeowners are frozen in place. They can’t sell. So first-time buyers can’t buy.

Squeezed by high interest rates and record prices, homeowners are frozen in place. They can’t sell. So first-time buyers can’t buy.

If buying a home is an inexorable part of the American dream, so is the next step: eventually selling that home and using the equity to trade up to something bigger.

But over the past two years, this upward mobility has stalled as buyers and sellers have been pummeled by three colliding forces: the highest borrowing rates in nearly two decades, a crippling shortage of inventory, and a surge in home prices to a median of $434,000, the highest on record, according to Redfin.

People who bought their starter home a few years ago are finding themselves frozen in place by what is known as the “rate-lock effect” — they bought when interest rates were historically low, and trading up would mean a doubling or tripling of their monthly interest payments.

They are locked in, and as a result, families hoping to buy their first homes are locked out.

Non-paywall link

  • cybervseas@lemmy.worldEnglish
    28·
    6 months ago

    If those conditions weren’t tough enough, first-time buyers and people in their first homes are now competing against a wave of investors and all-cash buyers who can forgo the mortgage game — 28 percent of U.S. homes sold in April were bought entirely in cash, according to the National Association of Realtors.

    Yep when rates are high, people/companies with a lot of cash can take all the profits. Buy up homes and rent them out to millennials and gen-z, who will never be able to afford home ownership.