Most people weren’t so lucky.
Some 900 miles away in Virginia Beach, Talia Phillips and her husband began looking for an exchange home last summer, after the birth of their third child. Their daughters, aged seven and 11, had their own room in the family’s three-bedroom home, while the couple shared the third with the baby.
A year later, they were optimistic about the equity they had built in their first home. But when they learned their mortgage would drop from $1,300 a month to about $3,000 if they bought a new home, they called off their search. “I’m just a little frustrated and I’m hoping that, you know, in a few years, interest rates will go down,” Ms. Phillips said.
Those who have less pay more
With buyers and sellers in the highest price categories effectively crippled, the brunt of the real estate market falls hardest on those with the least to spend.
“The replacement buyer just disappeared,” said Sam Khater, chief economist at Freddie Mac, explaining that homeowners who are unable to upgrade their homes instead move down the price continuum. “Lack of supply not only causes prices to rise, but also prices to rise even more in the bottom half of the price distribution.”
Prices in the lowest tier of the housing economy are increasing at a faster rate than in any other category. Over the past 20 years, the price of entry-level homes — defined as homes costing 75% or less than the median price in a given market — has nearly tripled since 2004, according to CoreLogic, a real estate information company. . (A starter home fitting this definition in Manhattan costs up to $863,000, while one in Cleveland goes for as little as $142,000, according to Zillow spokesperson Alex Lacter.)
News Source : www.nytimes.com
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