As interest rates rise, the ‘American dream’ of home ownership is fading for some: NPR

Mackenzie Bathgate and her husband, Jon, have been trying to buy a house in Lansdale, Pennsylvania, for eight months.

“At this point, we’ve seen 28 houses in person, but ultimately we made seven different offers, each one a little bit more aggressive than the last just because we got so tired,” Bathgate said. “It’s supposed to be exciting and it’s been the opposite.”

Bathgate said they had waived inspections and bid tens of thousands of dollars above the asking price, still no luck.

Meanwhile, they’ve been watching interest rates climb higher and higher, each increase adding to the pressure of finding a home.

“That’s when we started to feel all that stress of, ‘Oh, God, we need to make sure that every weekend is focused on looking at these three specific houses that we’re interested in,’ because we know they’re going to have an accepted offer on Monday.” .

The couple is now exhausted and has decided to put their search on hold, just as the Federal Reserve raised interest rates again.

On Wednesday, the central bank raised rates by three-quarters of a percent. It’s the fourth time it has done so this year, a pace the US hasn’t seen since the late 1980s.

The average rate on a 30-year fixed mortgage is now around 5.5%, almost double what it was at the beginning of the year, according to Freddie Mac. Those higher rates, combined with already high home prices, mean it’s gotten a lot harder to buy a home, even if the competition might be a little less stiff.

“Nationally and locally we are seeing a cooling down, a decrease in demand and an increase in supply,” said Ashley Jackson, a real estate agent with Realty Austin in Austin, TX. “We’re seeing that across the board, which you would expect with such a sharp increase in interest rates.”

Jackson said the sizzling real estate market had allowed sellers and agents to get used to properties being snatched up in a matter of days and being inundated with 20 or more offers for a listing, many above asking price.

“[Sellers] they may get a little frustrated if their house stays on the market for 21 days, which is actually still pretty good. So it’s just the narrative,” said Jackson, who is also the 2022 president-elect of the Austin Board of Realtors.

But the frustration has found no end for homebuyers, who have been battling a competitive market and continuing interest increases.

Sienna Connor currently rents an apartment in Iowa City with her husband, Rex, and their two babies. The Connors began considering buying a house in 2020, just before the pandemic, but the bank said they weren’t ready.

“We were told by a mortgage lender that our credit needed to be a little higher. It took us a few years to save up for the down payment and closing costs and all of that,” Sienna Connor said.

Finally, this month they were pre-approved at an interest rate of 5%. But that rate doesn’t lock in until an offer on a house is accepted. And with all the time it took to save and build credit, Connor said they may have missed the opportunity.

“A few years ago, we could probably afford a decent three-bedroom house for our family. But once the interest rate goes up, this area will be left out of this whole area,” he said.

Others have been able to find opportunities within the raises, like Peter Heuer and his wife, Cathy Yount. After a long search, they finally sign a contract for a house in Rochester, New York.

“I think they [higher interest rates] actually helped us, personally, because they lessened the competition a lot,” said Peter Heuer. “So in the last couple of deals that we put in, including the last one, which was successful, we only had a couple of deals on the property instead of at 10 or 20”.

Heuer said he was happy with the stability and freedom homeownership would bring him and his family. But for the Bathgates in Pennsylvania, the Connors in Iowa and many other Americans, those luxuries feel more out of reach than ever.

For Bathgate, it’s simple.

“We just want a home,” he said. “We just want to have a family and a garden and be able to have a beer on our deck at the end of the day. And it’s daunting and I feel like the American dream is no longer attainable.”

This story was adapted for the web by Manuela Lopez Restrepo.