Homeownership Hopes Plummet: Renters Face Steeper Climb Amid Surging Costs And Rates
With soaring housing costs and elevated interest rates acting as barriers, the dream of owning a home has become more distant for renters.
In February, 13.4% of renters expressed hopes of "residential mobility" — the belief that they will be able to afford a home someday, according to the New York Federal Reserve's annual housing survey. That's a record low. The percentage has declined from 15% in 2023 and dropped from its peak of 20.8% in 2014.
The median price of a home in February was $388,700, the highest since November, according to the National Association of Realtors. Mortgage rates also have stayed high, with a 30-year-fixed rate mortgage now at 7.22%.
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It's not that housing prices and interest rates are up. The survey also found that 74.2% of renters think getting a mortgage will be somewhat or very difficult, up from 66.5% in 2023 and 63.1% in 2022.
The survey results were revealed a week after the Federal Reserve decided against cutting interest rates as the economy continues to struggle with inflation. The federal funds rate has ranged from 5.25% to 5.5% since July when the Fed last raised them to the highest level in more than two decades.
"The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving toward 2%," the Fed's statement said.
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Homeownership is out of reach for many renters, but they also aren't optimistic about rental prices, either. The survey found renters expect costs to rise by 9.7% over the next year, up 1.5 percentage points from last year's survey and the second highest in history.
Real estate mogul Grant Cardone has said that a 20.8% decline in apartment starts will result in a shortage of homes that will cause rents to "explode" by 2026. The slowdown in apartment construction is the result of the increased cost of borrowing, which is tied to high-interest rates.
Cardone predicts that rents could increase to as much as $8,000 per month.
"You'll own nothing, no one will own anything, there will be fewer and fewer people own everything," he said during an interview with Grant Mitterlehner in March.
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This article Homeownership Hopes Plummet: Renters Face Steeper Climb Amid Surging Costs And Rates originally appeared on Benzinga.com
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