Christine Egan, a massage therapist living in Putnam County, New York, has been eagerly searching for a house for almost two years now. She and her 16-year-old daughter, Isabel, have been renting a townhouse in a suburban community located more than an hour north of New York City.
Ms. Egan describes the entire process as extremely frustrating. “The biggest problems are finding homes in my price range, and then when I do, being outbid by someone else,” she told The Epoch Times. In this region, houses in the $350,000 to $400,000 range are few and far between, and many of them require a tremendous amount of work.
“I can’t believe that these homes are selling for that much money and still need major renovations. After making the down payment, I'll have no money left to fix things,” Ms. Egan said.
What she’s looking for ordinarily wouldn’t be that difficult to find: a ranch-style home with three small bedrooms and a little yard.
“I want to stay in the same area, but I’m now faced with homes priced at $500,000 or more if I want something that doesn’t need serious work,” Ms. Egan said. “They’re beautiful homes, but I just can’t afford them.”
She said that some of the homes she’s seen in her price range need new kitchens, bathrooms, appliances, major plumbing, or electrical work. Mortgage rates, now at about 7.5 percent, are also hampering what she can afford.
“The only good thing is that I’m not in a rush to move, so I can play the waiting game,” Ms. Egan said. “I don’t need anything big, as my daughter will probably be going to college in a couple of years. I just want to find something I love that needs just a few cosmetic upgrades.”
For now, she wants to remain in suburban New York to be close to family and friends. Her situation isn’t unlike many in this country.
The National Housing Conference, a Washington-based coalition of U.S. affordable housing leaders, warns that there’s an escalating housing affordability crisis in the United States.
“While nominal wage increases have been observed in response to higher labor costs, soaring levels of inflation have significantly eroded those gains,” said David Dworkin, CEO of the coalition.
“As both housing and rental prices skyrocket, the dream of a decent home is slipping out of reach for far too many hardworking individuals and families.”
The National Housing Conference’s newly updated “paycheck-to-paycheck” database compares wage data with housing costs in metropolitan areas throughout the nation.
Using this model, an individual, couple, or family in the Seattle region would need a combined income of $234,000 to consider home ownership, with a median home price of $703,000. In Florida, in the Tampa and St. Petersburg area, the income requirement is $123,000 to purchase a home, with a median cost of $370,400.
As a result, fewer Americans are able to keep up with the rising costs, and the number of homes for sale across the country sank for the fourth month in a row, according to Realtor.com’s October Housing Report.
“The current housing market continues to challenge homebuyers and sellers alike,” said Danielle Hale, chief economist at Realtor.com.
“While record-high mortgage rates are putting off many would-be buyers, decreases in both inventory and the time homes spend on the market show that some buyers are moving quickly to lock in rates before they can go even higher.”
The Realtor.com report shows inventory is down nearly 42 percent compared to pre-pandemic levels, causing elevated home prices. To offset the scarce inventory, many potential homebuyers are looking to new construction, and as soon as affordable units come on the market, they’re being quickly snatched up.
Meanwhile, median listing prices nationally have risen by 37 percent since 2019.
A quick glance at the median listing prices throughout the country reveals that the California metro areas remain the most costly, with San Jose-Sunnyvale-Santa Clara at $1.3 million and Los Angeles-Long Beach-Anaheim at $1.15 million.
In Washington state, Seattle-Tacoma-Bellevue’s median home price is a close second at $792,000, followed by New York City and Newark-Jersey City at $730,000.
The most affordable metros include St. Louis, Missouri, with a median home price of $277,000, and the Detroit-Warren-Dearborn area in Michigan at $252,000.
Dwindling Home Sales
The National Association of Realtors (NAR) recently reported that existing home sales dropped by another 2 percent in September and were down by more than 15 percent from just one year ago. All four regions of the nation—the Northeast, Midwest, South, and West—registered year-over-year sales declines, and home sales nationwide have dipped to a 13-year low.National existing home sales—comprised of single-family homes, townhomes, condominiums, and co-ops—dropped from 4.68 million in September 2022 to 3.96 million in September 2023.
“As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” NAR chief economist Lawrence Yun said. “The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains.”
At the end of September, the NAR reported that the country’s total housing inventory was 1.13 million units—a 2.7 percent increase from August, but an 8.1 percent decline from one year ago. September’s median existing home price was $394,300, representing a more than $10,000 increase from September 2022, at $383,500. All four regions of the United States reported price hikes.
“For the third straight month, home prices are up from a year ago, confirming the pressing need for more housing supply,” Mr. Yun said.
First-time buyers were responsible for 27 percent of sales in September, down from 29 percent in August and also from September 2022, the NAR reported. Close to 30 percent of all transactions were cash sales, up from 27 percent in August and 22 percent in September 2022.
Individual investors or second-home buyers, who make up many cash sales, purchased 18 percent of homes in September, up from 16 percent in August and 15 percent one year ago. As a result, many would-be homebuyers are forced to settle for rental properties.
As higher rates continue to impact affordability and purchasing power, mortgage applications have recently plummeted to their lowest level since 1995, according to the Mortgage Bankers Association.
Many Consider Renting
Jonas Bordo, co-founder and CEO of Dwellsy, a national rental platform, told The Epoch Times that there’s a definite shift toward renting in the current market.
“New homebuyers are being priced out,” he said. “Prices have held up at incredibly high levels, and now there’s another layer of costs from mortgage rates that have more than doubled over the past few years.”
In addition to potential first-time homebuyers now deciding to rent, there’s a new market comprised of people who need to relocate and are opting to rent until the market stabilizes.
“Many of these people are likely to rent out their existing homes and become renters themselves in their new locations,” Mr. Bordo said.
Dwellsy research indicates that there has been no significant increase in rentals during this year. However, single-family home rentals have increased by 22 percent since January 2021.
“A lot of people moving from more expensive areas, such as New York or California, are likely going to pay a lot less for their home rental in the South or the Midwest,” Mr. Bordo said.
“Remote work is still allowing employees to keep their salaries but save more money by living in less costly areas.”
Mr. Bordo believes that a predicted stabilization of the market in 2024 won’t have a significant impact on rentals.
“Even with 6 percent interest rates, I think many people may still find it difficult to make that first home purchase,” he said.
Currently, the national median rent for a one-bedroom, one-bathroom apartment is $1,295, while the median rent for a three-bedroom single-family home is $1,890, Mr. Bordo said.
Realtor.com’s October Housing Report revealed some good news for renters: Costs for studios, one-bedroom units, and two-bedroom units declined by 0.7 percent for the fifth consecutive month. Median asking rents in the nation’s top 50 largest metropolitan areas fell to $1,747, down $29 from their peak in July 2022.
“As rents ease and both home prices and mortgage rates continue to climb, it’s become more economical to rent than to buy in nearly all major markets,” Realtor.com’s Ms. Hale said.
“However, even with an influx of new apartment units coming onto the market, renters are claiming these new apartments faster than prior to the pandemic.”
As expected, the most affordable metro area rentals can be found in the Midwest. Realtor.com found that Milwaukee, Cincinnati, Cleveland, and Indianapolis are among the top 10 metros experiencing the fastest year-over-year rent growth.
‘It Was a Rude Awakening’
After years of renting in New York City, Bianca Fabian and her husband, Scott Ramsawak, spent six months searching the tri-state area before moving into their first home on Long Island, New York.
“My husband works remotely, so he would have moved anywhere, but I needed to be close to Manhattan, near my clients,” Ms. Fabian told The Epoch Times.
Ms. Fabian is the co-founder of Command Collective, a public relations firm, and Mr. Ramsawak works in accounting and finance.
“We have two incomes and are very financially responsible, saving money and being prepared to make an offer,” she said. “But we found ourselves still struggling when it came to adding in taxes and elevated mortgage interest rates.”
Long Island homes come with much higher price tags than those in Putnam County, so the couple’s budget was anything under $1 million. What they eventually purchased was a home built in the 1960s with two large bedrooms and two tiny ones, plus a leaky pool and a rotting chimney that weren’t disclosed in the home inspection. Because of a bidding war, they were pushed to offer $100,000 more than the asking price.
During their search, the couple had also sought out estimates from contractors for any “fixer-upper” homes they saw. “Some of the worst homes looked great in the photos,” Ms. Fabian said.
“It was a rude awakening—some of the places looked like haunted houses, with holes in the wall, mold, nonfunctioning appliances, and just rundown conditions. It almost felt like a practical joke, and we couldn’t believe people were fighting over these places!”
For months, they spent every weekend looking at homes and slowly started to whittle down their “wish list.”
“At that point, we just wanted something without mold and with working electric, heat, a stove, and a refrigerator,” Ms. Fabian said.
When they found the home they’re now living in, they made an offer right in the driveway.
“The sellers wanted to move quickly since they were leaving the country, and I guess we just got lucky,” Ms. Fabian said. Their offer was accepted, and they moved in this past July.
“The first night, we found crickets in the basement, spied termites outside, and saw a mouse in the pool,” she said.
After fixing the pool and chimney and calling in pest control, they’re now in the market for furniture.
While they love the house and the neighborhood, they do worry about additional expenditures that may come down the road.
“We want to be happy—that is, until the next problem,” Ms. Fabian said.
