Many Americans are feeling that owning a home is increasingly out of reach due to elevated mortgage rates and higher home prices. The Federal Reserve recently cut its benchmark interest rate by half a percentage point and indicated that more cuts are on the way, but post-pandemic inflation has left scars on the housing market. This has left would-be buyers feeling left behind, and even homeowners feeling stuck in their current properties with cheap mortgages they are unwilling to give up.
Among the Americans interviewed by CNN about how the Fed’s rate cuts will impact their housing plans is Robert Galvez, a 27-year-old manufacturing engineer who plans to buy his own place next year after growing tired of renting. Home prices have climbed to near-record highs in the years following the pandemic, making it difficult for Galvez to find a place he can afford. He hopes that interest rate cuts will increase his buying power so he can purchase a one- or two-bedroom condo before his lease ends.
Tony, a retired individual in the electronic medical records industry, is considering moving to a smaller home with his wife to make maintenance easier, but the costs of doing so, such as higher mortgage rates and home prices, are holding them back. Mortgage rates have been falling in anticipation of further Fed rate cuts, with the average 30-year fixed mortgage rate dropping to 6.12% in early October. Tony is waiting for rates to drop back down to 4% before seriously considering moving to a smaller home.
Safiya Reid, a manager at an insurance carrier, recently purchased a home in the Atlanta area with her husband but wishes they had waited for the Fed’s interest rate cuts. She recalls a bad homeownership experience during the 2008 housing market crash when she purchased her first home at 22 years old. After selling that home in 2017, she and her husband were happy to be renters for a few years before deciding to buy a home large enough to accommodate family visits. Reid secured their mortgage through NACA but feels uncomfortable with the monthly payments, even with the lower interest rate they obtained.
While many Americans strive for homeownership, others may prefer the flexibility of renting. The uncertainty surrounding interest rates, real estate commissions, and refinancing options can make it difficult for individuals like Safiya Reid to feel confident in their decisions regarding homeownership. Despite hopes for lower rates and increased buying power, the volatility in the housing market post-pandemic has left many prospective buyers and current homeowners feeling uncertain about their financial decisions. The impact of the Fed’s rate cuts on the housing market remains to be fully realized as Americans continue to navigate the challenges of homeownership in a changing economic landscape.
