As the housing market in the United States continues to soar and mortgage rates spike to new highs, American homebuyers are feeling increasingly “locked out” of the real estate market. This is due to both the increasing difficulty in being able to afford homes, and also to the rising competition for listings.
All across the United States, prices are rising and buyers are finding it more difficult to find homes within their budget. To make matters worse, these same buyers are competing against investors with deep pockets and all-cash offers. With the increasing demand, bidding wars have become the norm in many markets, pushing prices up even more.
At the same time, mortgage interest rates are also hitting new highs, putting additional strain on homebuyers’ budgets. The Federal Reserve recently raised the federal funds rate—a move that typically means more expensive mortgages. It is also expected that the Fed will likely raise rates two more times this year due to the strong economy. This means that buyers will have to pay more for the same home they could have bought for cheaper, just a few months ago.
The combination of these high prices and high mortgage rates are causing many prospective buyers to feel locked out of the housing market. While it may be possible to stretch a budget so it works, buyers must now consider whether it’s even worth the effort. That’s because for many, the financial benefits of homeownership may no longer outweigh the cost.
With the real estate market continuing to rapidly evolve and adapt, buyers must be nimble and willing to take some chances. Those who are able to make a move fast and grab a good deal can still get the home of their dreams, if they act quickly enough. However, buyers must also be willing to accept a lesser home than they had originally hoped for, or a less-than-ideal neighborhood.
In the end, buyers may feel “locked out” of the real estate market as prices and mortgage rates soar. Yet with some savvy maneuvering and a little bit of luck, they may still be able to find a good deal and break into the market when prices eventually normalize.