The US housing market has changed dramatically since the pandemic – an issue looming over the election.
When Nathan Wilkins moved back in with his mother and sister in 2019, he hoped it would help him save money to buy a home.
But in the years since, the US housing market has been transformed by rising rents, surging home prices, and a massive jump in mortgage rates, making homeownership seem ever more impossible.
He and his sister are making more money than ever, the 32-year-old insurance adjuster from Utah says. But shelling out $2,500 (£1,960) a month in rent doesn’t leave much left over.
“It’s like I’m playing a game that you can’t win,” he says. “The fact that we’re being priced out just makes me want to throw up.”
Such frustrations are spreading, fuelling dissatisfaction and contributing to the widespread pessimism about the US economy that is looming over the country’s upcoming election.
The median home sale price in the US has jumped by nearly 30% since the end of 2019, hitting $420,000 this spring.
At a time of rising property values globally, the leap has been one of the most dramatic in the world, according to the International Monetary Fund.
And that’s not factoring in the added costs from higher interest rates, which now stand at roughly 7% for the 30-year, fixed-rate mortgage that is typical in the US, up from about 3% in 2020.
Homebuyers today need an annual income of more than $100,000 – well above the country’s household median of about $75,000 – to comfortably afford a home in most places in the US, research firms such as Zillow and Bankrate say, and face monthly payments that have roughly doubled in just four years.
“It makes me cry a bit,” says Megan Holter, who started looking to buy in Austin, Texas, back in 2019, when banks were offering her a 30-year fixed rate of about 4.75%.
She halted her search when the pandemic hit, priced out by the surging cost of building materials and homes.
She and her wife finally bought a home this year, but only after swallowing a 6.625% rate – and moving 1,200 miles north to Columbus, Ohio, a spot selected from a spreadsheet she created of cities with lower costs.
“Housing affordability was the number one thing that we’ve been considering for five years,” says the 30-year-old, who also switched jobs from the public sector to the private sector to make homebuying happen.
“We have moved mountains to make it possible.
“I’m just eternally grateful that we can afford it. I know a lot of other people cannot,” she adds.
Just 40.1% of renters expect to ever own a home one day, according to the New York Federal Reserve, the smallest share since the bank started asking renters the question in 2014.
Even homeowners, whose long-term mortgages shield them from immediate financial impact and who benefit from rising property values, tell pollsters that the changes in the market are a source of concern – as they push up property taxes and insurance costs, while making moving a less affordable prospect.
