High Rates and Prices Leave Many Stuck in a Starter Home – The New York Times
If buying a home is an inexorable part of the American dream, so is the next step: eventually selling that home and using the equity to trade up to something bigger.
But over the past two years, this upward mobility has stalled as buyers and sellers have been pummeled by three colliding forces: the highest borrowing rates in nearly two decades, a crippling shortage of inventory, and a surge in home prices to a median of $434,000, the highest on record, according to Redfin.
Buy/sell, rent/lease residential &
commercials real estate properties.
People who bought their starter home a few years ago are finding themselves frozen in place by what is known as the “rate-lock effect” — they bought when interest rates were historically low, and trading up would mean a doubling or tripling of their monthly interest payments.
They are locked in, and as a result, families hoping to buy their first homes are locked out.
“Home affordability is the worst I’ve ever seen it,” said Daryl Fairweather, Redfin’s chief economist.
A year ago, Chris and Alison Wentland were eager to sell their townhouse in the coveted Lincoln Park neighborhood of Chicago, so they hired a real estate agent who sent a photographer to take slick photos of the house, including a 3-D video that panned from room to room.
Starter Homes Rising Faster
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+200
%
Starter homes
20-year change
in home prices
+175
+150
+125
Lower priced
Higher priced
+100
Highest priced
+75
+50
+25
0
–25
2004
2010
2015
2020
2024
Starter homes:
Up to 75% of the median price
Lower priced:
75% of and up to the median
Higher priced:
Higher than and up to 125% of the median
Highest priced:
Higher than 125% of the median
+200
%
Starter homes
20-year change in home prices
+175
+150
+125
Lower priced
Higher priced
+100
Highest priced
+75
+50
+25
0
–25
2004
2010
2015
2020
2024
Starter homes:
Up to 75 percent of the median price
Lower priced:
75 percent of and up to the median price
Higher priced:
Higher than and up to 125 percent of the median price
Highest priced:
Higher than 125 percent of the median