Zachary Halaschak of the Washington Examiner details a growing problem for the Biden administration.
Soaring mortgage rates have combined with high housing prices to push homebuying out of reach for many people, causing major knock-on effects on their lives.
The one-two punch is causing some people to reconsider buying a home or discouraging them from searching at all. Still, other homebuyers have decided to bite the bullet and purchase a home in this market, but for a property significantly smaller than they could have bought just two years ago.
John Tyson moved to Philadelphia over the summer and is looking to put down roots in the area, which is where he grew up. He began searching for homes just outside the city but realized after research that the time was not right to buy.
Tyson said he used online mortgage calculators to determine, with mortgage rates around 7.5%, that renting is more attractive than buying. In fact, the advantage of renting versus buying has never been greater.
Tyson told the Washington Examiner that he sees buying a home as a good investment for the long term, but paying $3,000 or $4,000 a month is too much of a stretch for him right now.
For context, Tyson was paying just under $2,000 a month in rent in Denver and was spending more than $2,000 when he was living in New York City after he graduated from college.
“I was looking over it all and everything, and I just kind of realized that now is not the best time to buy, just given the mortgages and everything like that,” Tyson said.
In researching affordability, Tyson stumbled across a major factor propping up house prices: Inventory is low because people who locked in ultra-low mortgage rates during the pandemic are holding on to their homes instead of selling in order to keep that bargain deal.
