Economic Angle: Why It Is So Hard To Buy A House Right Now
Over the course of the COVID-19 pandemic many people have felt like they were living on top of each other. Naturally people wanted to move to another house but unfortunately that is not as simple as it once was.
In the housing market, the mortgage rates have fallen down. In 2020, when the pandemic caused “mortgage rates to plummet” it increased the want for new houses. (Washington Post) According to the CNN article titled, “Many homebuyers are dropping out of the market,” the lower mortgage rates have “pushed home prices to record highs, with some homes attracting multiple all-cash offers, and others selling for $1 million over the list price.” This in itself has already priced out the majority of Americans who can buy homes like that with ease. A whopping “53% of millennials say that they cannot afford a downpayment” according to the article titled “For millennials, this is the greatest hurdle to homeownership.” That is more than half of a generation that cannot afford to pay for a house of their dreams. It is simply not possible for the ordinary American to buy a home that is $1 million over the original listing price in Southern California and in many other states when the homes are selling way over the original asking price. This is simply because they do not have or make that kind of money.
Over the past four months though, home sales have fallen consecutively. This is due to the fact that “there aren’t enough homes to buy, but also because the competition and higher prices are turn offs to those who can’t afford to compete”, according to a recent report from the National Association of Realtors. This is because the amount of homes that are for sale are not as much as they used to be. According to the article titled “California home sales volume lays low” it stated that in “2020 it ended with 439,200 annual home sales in California.” Also, “2020’s overall flat performance follows a 1% decrease in 2019 and a 4% decrease in 2018.” This is simply because the number of homes that are up for sale are not as much as they used to be.
There is not much of a light at the end of the tunnel when it comes to the housing market. Only “32% of consumers believe it’s a good time to buy a home,” which is an all time low in the housing market. In fact “high home prices were cited as the main reason people were pessimistic toward home buying,” especially to those who are looking to buy homes for the first time. With first time home buyers, many have to resort to their parents or their in-laws to help pay for what they cannot afford. This trend of parents and in-laws helping their children has become more common in this era than it ever has been before. It is becoming the new normal because this is the first generation where children are making less money than their parents. This also widens the racial and economic divide, because Black Americans, for example, have accumulated less wealth than white people, in general, leaving them less to pass on to their kids.
The housing market is certainly one that is always changing, but today it looks like there won’t be a change in who can and who can’t buy the homes that are up for sale.
