Rising mortgage rates, record high home prices and limited inventory of houses have put quite the damper on the American Dream of home ownership.
For the first time since 1978 when polling was done, the majority of Americans do not believe that buying a home now is a wise decision.
The country has never been more pessimistic about homeownership. Only 30% of survey respondents to a recent Gallop Poll say that now was a good time to buy a house. That is down 23 points from last year and the lowest on record. Even though interest rates are still lower than they were 20, 30 and 40 years ago, they are higher than what they were in the last few years.
The good news (if you want to call it that) is that demand for houses has dropped a little, easing the pressure on prices. During the early Spring of this year (2022) most homes going under agreement sold for $50,000 to $250,000 over the list price and around 90% of these buyers also waived their home inspection contingency to make their offer more attractive.
In the 2nd half of 2022, most houses going under agreement were still selling above the list price but the amounts over list dropped and calls for inspections have ticked up a little. The downward trend in prices and the uptick in inspections appears to be gaining traction.
So will the American Dream of home ownership remain at its current low? My guess is that if apartment rental rates continue to climb and mortgage interest rates remain above 5% and builders start building more new homes and more existing homes come on line, the housing market should start to normalize by the end of 2023. Of course if a recession hits, things could change a lot faster.
2024: Update: Well it looks like the housing market did not normalize in 2023 and unlikely that 2024 will bring anything different. Low housing inventories and higher mortgage rates have subdued the housing market considerably. Some of the adverse affects aside from keeping many young people out of the housing market, has been numerous real estate agents and home inspectors seeking employment in other fields.