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

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

    Noah Weidner

    January 20, 2024

    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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