High Rates, High Costs: Highway Robbery Is What Homeownership Feels Like In 2024 – The Average Joe

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    High Rates, High Costs: Highway Robbery Is What Homeownership Feels Like In 2024

    Noah Weidner

    January 20, 2024

    Ask any American, and they’ll say that homeownership is part of the American Dream… but 51% of Americans fear they’ll never own a home sweet home.

    When interest rates were 2%, the average borrower would have paid over one-third of their 30-year fixed mortgage in interest. Today, the math is even worse. With rates over 7%, that rises to 58% — turning the American Dream into the American Debt.

    Realities of homeownership: According to the National Association of Realtors (NAR), the median monthly mortgage payment on a 30-year fixed loan was $2,051 in Q2 2023. All in, the average homeowner could expect to shell out around $3.5K monthly for their dream home:

    • Zillow research shows that home maintenance and utility costs have risen to over $14K per year ($1,180 per month).
    • NerdWallet warns that homeowner insurance costs adds another $1,820 each year.
    • And if you’re among the 30% in an HOA, budget an extra $170 monthly.

    This ain’t the ‘90s

    High rates and high costs have Americans asking: should I rent or should I own?  Buying no longer makes sense for most Americans — especially in housing-scarce areas like Florida and California.

    • Attom’s data indicates that renting a median three-bedroom apartment is more affordable than owning a “similarly-sized home” in 90% of markets as of Jan. 2024.
    • Redfin’s findings show a 0.8% year-over-year decline in rents, currently averaging $1,964. Zumper predicts continued softening in 2024 due to increased market supply.

    What about home prices? Despite softer rent prices, median home prices have yet to see a meaningful drop. Instead, they’ve soared to a record $389.8K in 2023, before settling down slightly to $382.6K in December. According to NAR’s Chief Economist Lawrence Yun, “If price increases continue at the current pace, the country could accelerate into haves and have-nots.”

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