Help may not be on the way for first-time homebuyers frustrated by high mortgage rates and even higher home prices.
“This will take many years to work itself out. There isn’t a magic fix,” Michael Gapen, head of US economics at Bank of America, told CNN in a phone interview. “The message for first-time homebuyers is one of patience and frustration.”Home prices spiked during Covid-19 and then the Fed’s war on inflation sent mortgage rates surging.“It’s been a weird combination. Mortgage rates rose substantially but so did home prices. That typically doesn’t happen,” said Gapen.
For many, it just doesn’t make sense to move. And because those homeowners are not moving, the supply of existing homes on the market is limited. That’s because the mortgage rate of people who already own is historically low. And the rate for new buyers is elevated. Bank of America doesn’t think that gap will shrink much for years.Dave Liniger, who co-founded real estate giant RE/MAX with his wife in 1973, said the lock-in effect means people who want to size up to a bigger home can’t, and the next generation can’t even get their foot in the door for a starter property.
But there are many Americans who are on the outside looking in. They’d like to buy but can’t afford to at these prices and these mortgage rates.In a recent Gallup poll, just 21% of Americans said it is a good time to buy a house, tied for the worst reading in Gallup history. An overwhelming majority — 76% — say it’s a bad time to buy.
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