B4 • Friday, May 26, 2023
thegardenisland.com
THE GARDEN ISLAND
Is the American dream out of reach? Mounting debts and stagnant wages
72 percent of renters say they’ll never be able to afford a home. Are they right?
Forget buying a house most renters are prioritizing simply getting out of debt. Student debt has been an undeniable drag on young Franklin Schneider Americans’ finances, BusiWEALTH OF GEEKS ness Insider reporting that student debt is actively preFinding an affordable home in 2023 is like finding a venting 36 percent of millenneedle in a haystack made of nials from buying a house. other needles. At least, The Home Bay survey that’s the sentiment exfound that 71 percent of renters consider being debt pressed by most U.S. rentfree a very important mileers. A new study found that 72 stone. percent of renters are conSignificantly fewer rentvinced they’ll never be able ers, 51 percent, consider to afford a home. The findowning a home to be very important to them, behind ings come from Home Bay, a having a comfortable retirereal estate education platform, which polled 1,000 ment, 66 percent, and ownrenters about their feelings ing a car, 59 percent. toward homeownership, the The findings underscore NAM Y. HUH / ASSOCIATED PRESS housing market, and the how priorities have shifted American Dream. among younger generations, A sign announcing that homes are sold out is displayed near a development in The answers reveal a funat least in part due to finanNorthbrook, Ill., on Monday, May 22, 2023. damental pessimism about cial necessity. the younger generations will Although many blame inflaQuite often, the line bethe trajectory of the real esAfter paying their bills, make up ground eventually. tion, home price increases most renters don’t have tate market. Two in three tween the two is genera“A portion of millennials much income left to save for renters, 66 percent, said cur- tional. About 61 percent of have far exceeded inflation and zoomers may have in most parts of the country. a down payment. In fact, 73 rent home prices make them renters believe millennials As renters blame sky-high percent of renters said they and Gen Z will “never reach homeowning grandparents,” feel hopeless, and just over Painter said. “At some point, prices for their inability to can’t afford to put any the same homeownership a quarter, 28 percent, said these (generations) may be buy a house, Painter and money towards a down payhomeownership used to be, rates as baby boomers.” other experts say soaring At the moment, their pes- able to buy due to inheribut is no longer, part of the ment. prices are just a symptom of American Dream. Considering that the aversimism seems justified. Mil- tances, but will likely bethe real problem - low hous- age sale price for a home in lennials currently trail baby come homeowners after The new generational boomers by a whopping 30 their parents did.” late 2022 was $535,000, acing supply. gap percentage points in the Renters know they’re beSince 2016, inventory has cording to Federal Reserve Renters’ view of the hous- metric, according to U.S. data, many Americans have hind, and the overwhelming dropped by 60 percent, Census data. while prices have risen by nowhere near enough inmajority blame high home ing market is stark, espeThere might be some 50 percent. That mismatch prices. Nearly three-quarcially since they’ve spent come to purchase a home hope for them, though. Gary ters of respondents, 72 per- between supply and dethe last few years watching on their own. Painter, a professor at the house-rich homeowners Even with a 20 percent cent, thought they’d be mand is one of the biggest benefit from price apprecia- Sol Price School of Public down payment, experts say homeowners by now, and 86 culprits behind the counPolicy at the University of percent say home prices are try’s affordable housing cri- affording the mortgage on a tion, fueling the perception Southern California, believes too expensive nationwide. home that price would likely of haves and have-nots. sis.
Average long-term mortgage rate rises to 6.57 percent this week, highest level since mid-March
require an annual income of about $138,000. The median worker makes less than half of that $54,000 per year, according to the U.S. Bureau of Labor Statistics. A light at the end of the tunnel? America’s housing problems didn’t pop up overnight, they’re the result of years of home prices outpacing wages. Consequently, housing can’t be solved overnight, and Painter said it begins with more emphasis on construction. Additionally, Painter noted that wealthy countries with better housing situations typically have policies to support low-income households. For example, he suggested providing tax credits to households paying more than 50 percent of their income in rent. However, solving this crisis won’t be easy and resistance could come from unexpected quarters. “Current homeowners have a selfish incentive to support policies that restrict the building of housing,” Painter said, “because it increases their home equity.” It’s a reminder that there are two sides to every story and that one buyer’s affordability crisis is another homeowner’s good fortune. ••• This article was produced by Home Bay and syndicated by Wealth of Geeks.
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ASSOCIATED PRESS LOS ANGELES — The average long-term U.S. mortgage rate rose this week to its highest level since mid March, driving up borrowing costs for prospective homebuyers facing a housing market that’s constrained by a dearth of homes for sale. Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan rose to 6.57 percent from 6.39 percent last week. The average rate a year ago was 5.10 percent. High rates can add hundreds of dollars a month in costs for homebuyers, limiting how much buyers can afford in a market that remains unaffordable to many Americans after years of soaring home prices and limited housing inventory. The median monthly payment listed on applications for home purchase loans in April rose to $2,112, up nearly 12 percent from a year ago and a 0.9 percent increase from March, the Mortgage Bankers Association said Thursday. The average rate on a 30-year home loan has risen two weeks in a row, echoing moves in the 10year Treasury yield, which lenders use as a guide to pricing loans. The 10-year Treasury yield has been mostly rising of late, climbing to 3.79 percent in afternoon trading Thursday. Two weeks ago, it was at 3.39 percent.
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