Buying a home is considered the American dream for many people. However, many people have been forced to put that dream on hold because of higher interest rates.
The National Association of Realtors has conducted a survey of home buyers and sellers every year since the 1980s. This year, first-time homebuyers made up 26% of all homebuyers. That’s the lowest percentage in the survey’s history, down from 34% last year and 50% in 2010.
Interest rates have risen from below 3% to around 7% in the last year.
“Even a 4% swing in interest rate could mean $300 or $400 more dollars per month for a family. That’s a significant hit to one’s budget,” said Richard Martin, a business professor at the University of Georgia.
“It’s going to impact the ability to qualify for the mortgage,” Martin added, “I fear we might have shifted to a new normal, that’s kind of, well, it’s kind of the old normal? I mean, this is what rates used to be like. We got kind of spoiled with incredibly, incredibly low rates for 20 years.”
In the 2000s, 6% interest rates were around average. In the 1980s and 1990s, six percent would have been a steal.
What’s happened since? A lot. The construction of starter homes is at a 50-year low. Homebuyers are being outbid by corporate investors. The pandemic also put many people out of work and slowed down the supply of new homes.
It’s made homeownership a challenge for many, particularly in communities that have been systematically removed from wealth for centuries.
“Ninety-three percent of the families that we serve in Atlanta are African American families. Many of them, 80% of them are women who head their household,” said Rosalyn Merrick a representative of Habitat for Humanity.
“The racial wealth gap is at the same level it was before the Fair Housing Act was passed. So, when discrimination was legal, the gap in homeownership levels was about the same as it is now," said Natallie Keiser, who leads House ATL, an organization that works to create affordable housing.