Source: 13 WMAZ —
LOS ANGELES — Homeownership is likely to remain a pipe dream for many Americans this spring homebuying season.
The nation’s worst housing slump in nearly a decade stoked hope among prospective buyers that homes could be scooped up more easily. But while prices appear to have peaked last summer, they still ended 2022 higher than they were at the end of 2021. And the median U.S. home price has increased 42% since 2019.
The average long-term rate on a 30-year mortgage reached a two-decade high of 7.08% in the fall. Rates eased in December and January, but have been climbing since early February. The average rate hit 6.73% last week, the highest level since early November. A year ago, it averaged 3.85%.
That rate translates into a roughly 49% increase in the monthly payment on a median-priced U.S. home than a year ago, said George Ratiu, senior economist at Realtor.com.
“For real estate markets, the rise in rates means higher mortgage payments, deepening the affordability challenge just as we move into the crucial spring homebuying season,” he said.
For prospective buyers holding out for a meaningful dip in mortgage rates, they may be in for a long wait. Zillow recently polled 100 economists and real estate experts on their outlook for what the average rate on a 30-year mortgage will be by the end of this year and the median forecast was 6%.
Stronger-than-expected reports on the economy this year have fueled expectations that the Federal Reserve may have to keep pushing up its key borrowing rate to tame inflation, deepening the affordability challenge for would-be buyers like Joe Arndt in Reiserstown, Maryland.
The 28-year-old athletic trainer has been looking to buy a home in the Baltimore area for over a year, but hasn’t found much he can afford within his $225,000-$250,000 price range. He now feels shut out of the market.
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