Squeezed by high interest rates and record prices, homeowners are frozen in place. They can’t sell. So first-time buyers can’t buy.
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.
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.
Starter homes aren’t the problem.
People need different types of homes as a single professional vs family with kids vs retiree.
In a normal market, people would have the freedom to trade out to the right kind of house, and move to a new city if that’s what they want.
“Normal” is a term used for idealistic dreams that don’t ever exist in reality.
Twice now I’ve sold my smaller home to move into a larger one to accommodate my growing family.
It’s been a normal thing for millions of families, but not when there’s an interest rate spike like in 2023 or 2008.
So its your own personal experience?
Kind of like… normal is your situation you’re using to define what is an ideal everyone else should have and want.
I guess it’s just me, the article’s author, and the millions of families in the situation they described.
Ugh, why do people just want to confront people on here by focusing on some petty semantics like anybody gaf. It’s such Twitter behavior
You’re 100% projecting. Also the other poster said nothing about “ideal” but what was normal. Which it absolutely was and still would be if interest rates weren’t so high.
Eh I’m not sure it would be that way again even if interest rates were low. Private capital firms (Blackrock) have bought up a lot of homes
It will take time, but that money will eventually migrate back to mortgage securities if rates stay higher. As the cost of repair and evictions realized, rental ROI looks less attractive than a safe 5%+.