Living Remains a Dream for Many: Tense Real Estate Situation in the USA

The real estate market in the USA remains a challenge for many. This is also true for Lindsey Vogel, who has been searching for her first home since February. In Burke Centre, Virginia, the selection proves to be sparse. Despite regular visits to open houses, the 34-year-old electrical designer has yet to find a suitable property. A major problem is the current mortgage rates, which have been above 6% for some time and are significantly higher than at the start of the pandemic. Potential buyers like Vogel are hoping for a decline in rates to seize an opportunity for a property in a prime location at a fair price. The market has been difficult for first-time buyers, as high financing costs, record prices, and limited supply continue to discourage many. Sales figures in the resale market dropped in September to their lowest level since 2010, as reported by the National Association of Realtors. Only 26% of purchases were made by first-time buyers, a ratio last similarly low in August 2024 and November 2021. Jim Egan, a housing strategist at Morgan Stanley, explains that the so-called "lock-in effect" among homeowners is causing many to refrain from making moving plans due to their low interest rates during the pandemic. This trend is impacting the available supply of properties. According to Egan, the current mortgage rate is 2.5 percentage points higher than the average rate of most home loans. Vinay Viswanathan, an analyst at Goldman Sachs, also warns potential buyers not to expect significant rate cuts in the short term, even though the Fed recently reduced its benchmark rate by half a percentage point. Recent data even show an increase in 30-year mortgage rates to 6.54%. The increase in property prices and higher financing costs are also affecting purchasing power. Applications for new mortgages recently dropped by 5%. While current interest rates are lower than in the same period last year, this is not enough to offset the rising prices. The median home price rose by 3% in September compared to the previous year, reaching $404,500. For many Americans, including Whitney Ellingson and her fiancé, the dream of owning a home is currently difficult to achieve. Today's interest rates are raising the monthly burden, forcing many to adopt a wait-and-see approach until rates decrease again. Amidst these developments, the real estate market in the USA remains a challenge, with potential buyers waiting for a glimmer of hope on the horizon.