Young Americans cannot afford to buy a home

[New Sancai Compilation First Release] When 37-year-old Jennie Luhmann began searching for her family’s “forever home,” she found herself facing a series of daunting challenges: There were few properties for sale, and buyers All-cash offer, and interest rates keep climbing.

Struggling with overpayments and soaring mortgage rates, Luhmann and her husband decided to rent and then temporarily move into her mother's house. Her case is not unique. For younger generations of Americans, homeownership feels increasingly out of reach. They face the pressure of student loans and child care costs in an era of slowing economic growth.

Amid all the pressure, U.S. President Joe Biden is trying to address negative sentiment about his poor handling of economic policies during his re-election campaign. The Biden administration is trying to shrink America's housing undersupply, in part by lowering barriers to building homes, but it's not a quick fix.

Millennials, the generation born between the early 1980s and the late 1990s, will make up the largest share of homebuyers between 2014 and 2022, according to the National Association of Realtors (NAR). But this year they lost ground to the baby boomers, who can buy homes with cash.

“Inventory is quite limited, and affordable options are the most popular,” said Jessica Lautz, deputy chief economist at NAR. “We’re seeing millennials struggle with home ownership, especially in the As interest rates rise," she added.

Lautz said young people in the United States are "carrying more and more student loan debt," and restarting payments in October after pausing payments during the pandemic has exacerbated financial stress.

NAR said that among first-time buyers, 27 per cent moved directly from their original family members to a home they purchased last year, the highest proportion since the 1980s. First-time homebuyers are also becoming older, with the average age being 36.

extremely frustrated

"This is not what we expected when we were 37 and 42 years old," Luhmann said. "We thought we would have a family and own our own home." "We paid a lot of rent," she added. "This year, we finally decided to move back in with my mom."

Luhmann, who lives in Pennsylvania, predicts that given market trends, it will be difficult for them to make an offer on a house they like in the next year and a half or so.

Existing home sales have cooled to near their lowest levels since January as sellers opt for a wait-and-see approach after having earlier secured lower mortgage rates.

In August, U.S. mortgage rates hit their highest levels in more than two decades, with the most popular 30-year fixed-rate mortgage averaging 7.2%. Median-priced homes also remain expensive. "It's really frustrating because we have a two-year-old and we really want to have a complete family and start a new life together," Luhmann said.

American dream

"The lack of supply is causing prices to go up," said Joan George, a real estate agent from New Jersey. "I've been in this business for 40 years and I've never seen prices like these." She said in New York Soaring costs in areas such as these are also prompting buyers to turn to nearby markets.

The four-bedroom, two-and-a-half-bathroom family home that George calls "the American dream" is becoming increasingly out of reach. Real estate agent Kim. Kim Rock added that before the pandemic, a four-bedroom single-family home in the Philadelphia suburbs might have sold for around $400,000. But now, such homes sell for an average of $600,000 or more.

"We're finding that some buyers are now taking up to a year to find the right home," she said. "It's really the most difficult situation for younger buyers who have more limited resources and cash."

housing shortage

Researchers at the San Francisco Federal Reserve Bank predict that the recent slowdown in rents and home prices could "significantly" reduce housing inflation, so conditions may ease further ahead.

Housing-related inflation, which takes into account the rents and implicit rents people pay for their homes, remains high despite declines in other indicators.

However, NAR’s Lautz said the U.S. is still short of about 5.5 million housing units. The solution is to convert vacant office buildings into residential space, but current trends have exacerbated the gap between rich and poor.

Lautz said the age of first-time buyers four years ago was 28, meaning people were "basically missing out on eight years of wealth building through home ownership". They also point to lower rates of black and Hispanic buyers entering the housing market, suggesting that housing inequality in the United States exacerbates wealth inequality.

Another American buyer, Nasir Sayed, 36, is looking for a family home in Maryland but said that while he liked the area, the $800,000 to $900,000 price tag was prohibitive. For him, "it doesn't make any economic sense."

The father of two is considering buying a home in Georgia, where he believes he can buy a similar home for $250,000 less. "I had no choice," he said.

(Compiled by: Zhang Shanyuan)

(Editor: Jiang Qiming)

(Source of the article: First published by Xinsancai)