The dream of owning a home in America is slipping farther away for many, with average monthly mortgage payments now nearly double what they were at the start of the Biden administration.
As interest rates surge above 7% and housing prices continue their ascent, aspiring buyers are confronted with one of the most unaffordable markets in recent memory.
Recent analysis indicates that opting to rent might make more financial sense, with average new leases ringing in at $1,000 less per month than the cost of home loans.
The landscape is bleak, prompting experts to advise potential buyers against waiting for a market shift and instead bracing for an extended period of higher interest rates.
Data from real estate investment firm CBRE illustrates a stark reality: average monthly payments on a new home soared to $3,322 in the third quarter of this year, marking a staggering 90% increase since late 2020 when it hovered at just $1,746 before Biden took office.
This analysis, centered on a $430,000 home with a 30-year mortgage, considering a 10% down payment, underscores the gravity of the situation.
It’s important to note this calculation doesn’t incorporate a slight recent dip in home loan rates.
The surge in mortgages finds its roots in the Federal Reserve’s assertive drive to elevate interest rates from near-zero in April 2020 to a 22-year high, reaching between 5.25% and 5.5%.
This aggressive strategy aimed to curb red-hot inflation, hoping to temper consumer spending and rein in prices.
Hannah Jones, Senior Economic Research Analyst at Realtor.com, says she expects interest rates to come down by next year, which could take $200 to $400 off monthly mortgage payments.
