American Dream Of Owning A Home Is Dead, Majority Of Renters Say
The comments below are an edited and abridged synopsis of an article by Lauren Aratrani
Most renters in a new poll said they want to own a home in the future, but 61% are worried they will never be able to do so.
Redfin estimates only 16% of home listings in 2023 were affordable to the typical US household. In comparison, 50% of listings in 2013 were affordable on a median income.
Much of the housing market’s turbulence started during the pandemic. In 2021, when interest rates were near zero, home sales reached 6.1 million, the highest since 2006, before the housing bubble crash. Then, as inflation reached a high in summer 2022, the Fed started to raise interest rates.
The 30-year mortgage rate hit 7.79% in 2023, a 20-year high. By year end, home sales had dropped to a 30-year low. Polling shows most Americans—renters and homeowners—are hesitant about making any real estate moves given the current economic environment.
But interest rates are just one part of the story. Home prices were on the rise even before the pandemic, going up each year since 2012.
Rising home prices coincide with a drop in new housing construction after the Great Recession. Though construction on single-family homes bottomed in 2009, the number of new homes being built has been below pre-recession levels, while the US population has continued to grow.
So even when interest rates come down, home prices will still be high as inventory remains low. This is good for homeowners, but bad for renters who are being priced out of the housing market.
Because of rising home prices, the wealth gap between homeowners and renters is growing. In 2010, homeowners made up 54% of bankruptcies. In 2023, they made up only 23.4%. Nearly half of renters said they didn’t have enough funds to pay when a bill was due last month, compared to 29% of homeowners.
Buying a home in the US is starting to look like a Catch-22: Owning a home can help a family build their wealth, but to afford a home, a family needs to have some degree of wealth in the first place.