David Bahnsen, founder and CIO of Bahnsen Group, is examining the real estate market as young homebuyers struggle with the ongoing housing crisis.
The cost of buying a home has skyrocketed in recent years, with high mortgage rates and rising home prices putting homeownership out of reach for many Americans.
The issue is even more acute for millions of people who live in key battleground states that could determine the outcome of the 2024 presidential election.
New Discoveries Redfin Higher mortgage rates and rising home prices have pushed the median monthly mortgage payment for homebuyers in battleground states to a record high of $2,161, up 92% from the time of the 2020 election.
Home prices in these states have also soared over the past four years, rising nearly 40% to a record high of $316,063.
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Redfin’s report is based on trends in seven battleground states: Arizona, Nevada, Wisconsin, Michigan, Pennsylvania, Georgia and North Carolina.
A Coldwell Banker LLC sign is displayed outside a home for sale in Las Vegas, Nevada, on Tuesday, Nov. 27, 2012. (Photographer: Jacob Kepler/Bloomberg via Getty Images/Getty Images)
“Voters in battleground states are concerned about home affordability as high home prices, mortgage rates and a shortage of homes for sale make homeownership feel impossible for some Americans,” said Elijah de la Campa, senior economist at Redfin.
Rapid increases in prices and mortgage rates have made median-priced homes unaffordable for the typical battleground state resident, assuming a household spends 30% or less of their income on monthly housing costs.
A household making the median income in battleground states, about $79,155, would need to spend 32.8% of their income to buy a typical home. By comparison, in 2020, the same household would have had to spend much less (about 21.8%) on a typical home.
Why can’t I find any homes for sale?
A “For Sale” sign sits in front of a home in Miami, Florida on February 22, 2023. (Photo: Joe Raedl/Getty Images/Getty Images)
There are a variety of driving forces behind the rise in house prices.
Years of under-construction created a nationwide housing shortage, a problem that was then exacerbated by soaring mortgage rates and the cost of construction materials.
Rising mortgage rates over the past three years are also creating a “golden handcuff” effect on the housing market: Sellers who locked in record-low mortgage rates of 3% or less at the start of the pandemic are becoming reluctant to sell, further restricting supply and leaving eager would-be buyers with few options.
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Economists predict mortgage rates will remain high for most of 2024, then Federal Reserve Even if they start cutting rates, they are unlikely to return to the lows seen during the pandemic.
Mortgage buyer Freddie Mac said Thursday Average interest rate for a 30-year loan This week it fell to 6.77%, down from a fall peak of 7.79% but still significantly higher than its pandemic-era low of just 3%.
A home in Hercules, California, on August 16, 2023. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
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The supply of homes available for sale remains an astonishing 34.3% down from normal levels before the COVID-19 pandemic began in early 2020, according to a separate report from Realtor.com.
A majority of homeowners say they would be nearly twice as willing to sell their home if their mortgage interest rate was 5 percent or higher, according to a Zillow survey. Currently, about 80 percent of mortgage holders have interest rates below 5 percent.
