Source: NPR —
Rebecca Bush started her home search in January of 2020.
“I thought maybe I’ll find the perfect house in the next couple of months, and then it will line up with when my lease ends,” the 27-year-old says. “Obviously we all know what happened in March.”
Coronavirus. The housing market plunged into chaos as a result of the pandemic. Home values increased nearly 20% across the U.S. between September 2020 and September 2021, according to Real Estate Witch. People were in a home-buying frenzy despite the soaring costs. It didn’t leave a lot of houses on the market, and low supply of homes continues to be an issue in 2023 despite prices slowly cooling off.
Then came inflation and the Federal Reserve’s attempt to combat it, which pushed some interest rates on mortgages to above 7%.
Between the rising interest rates and having to compete with all the cash purchases, Bush was in a bind when making offers on properties in her home of Tennessee.
“Every time I’ve been beat out by someone who it seems like they’re coming in from out of town, the house ends up going for way more than it was listed for – 50, 60 grand more,” she says. “And typically cash … things that I just can’t compete with as a first-time home buyer.”
A tight home market and high interest rates have left prospective home buyers like Bush feeling locked out – at least for now. But owning a home is still a cornerstone of the American dream for many, and a key way to build wealth. What happens when you can’t buy one?
The suburbs opened up after the war
All the money Bush has been saving for a future home is just sitting in her bank account. She’s now thinking, if she isn’t going to buy a home any time soon, what should she do with it?
“I just kind of wonder if I need to figure out a different place to build wealth,” she says. “Is it not in a home?”
“Homeownership has been a central way of building wealth, I would say, certainly all throughout the post-war period; the wake of World War II, when the suburbs opened up,” says Chris Herbert, the managing director of the Joint Center for Housing Studies at Harvard University.
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