Buying a home is considered the American dream for many people. However, many people have been forced to put this dream on hold due to rising interest rates.
The National Association of Realtors conducted a survey of home buyers and sellers every year since the 1980s. This year, first-time home buyers accounted for 26% of all home buyers. This is the lowest percentage in the history of the survey, down from 34% last year and 50% in 2010.
Interest rates have risen from less than 3% to around 7% last year.
“Even a 4% change in the interest rate could mean $300 or $400 more per month for a family. It’s a blow to the budget,” said Richard Martin, a business professor at the University of Georgia.
“It’s going to impact the ability to qualify for the mortgage,” added Martin, “I’m afraid we’ve moved into a new normal, it’s a bit, well, it’s a bit l ‘old normal? I mean, that’s what the rates looked like. We’ve been blessed with incredibly, incredibly low rates for 20 years.
In the 2000s, interest rates of 6% were around the average. In the 1980s and 1990s, six percent would have been theft.
What has happened since? A lot. Startup home construction is at a 50-year low. Homebuyers are outbid by corporate investors. The pandemic has also put many people out of work and slowed the supply of new homes.
This has made home ownership a challenge for many, especially in communities that have been systematically stripped of wealth for centuries.
“Ninety-three percent of the families we serve in Atlanta are African American families. A lot of them, 80% of them are women who run their households,” said Habitat for Humanity representative Rosalyn Merrick.
“The racial wealth gap is at the same level as before the Fair Housing Act was passed. So when discrimination was legal, the gap in homeownership levels was about the same as it is today,” said Natallie Keiser, who runs House ATL, an organization that works to create affordable housing.