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Rising Rates and Realities

Written by Down Money Media

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Posted on June 24 2024

The American dream of homeownership seems to be slipping further away for many, especially renters facing high housing costs and elevated interest rates. According to the 2024 Survey of Consumer Expectations Housing Survey from the New York Federal Reserve, only 13.4% of renters believe they will one day be able to afford a home, marking a new low from the previous year's 15% and significantly down from 20.8% in 2014.

A mix of daunting challenges contributes to this pessimistic outlook. The survey highlights that a significant majority of renters, about 74.2%, find obtaining a mortgage somewhat or very difficult, a noticeable increase from previous years. This difficulty is compounded by the high mortgage rates that persist; as of now, the average rate for a 30-year fixed mortgage stands at about 7.22%, as reported by Freddie Mac, emphasizing the financial barrier for many aspiring homeowners¹.

Furthermore, the median home price, as noted by the National Association of Realtors, has climbed to $388,700, with housing affordability remaining strained under these conditions. The expected increase in home prices adds another layer of complexity, with survey respondents anticipating a 5.1% rise over the next year, nearly double the rate expected last year.Renters aren't seeing relief on other fronts either, with expectations for rental costs to increase by 9.7% over the next year, indicating continued pressure on their financial resources.

These findings underscore a growing issue: the dream of owning a home is becoming increasingly unattainable for many Americans, blocked by a confluence of economic factors that show few signs of abating soon.

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