You may have heard that it’s a terrible time to buy or rent a home. A severe housing shortage, high mortgage interest rates and high demand from growing numbers of new households are making access to a roof increasingly unaffordable.
The only group that seems to be doing well in this housing crisis are homeowners who took out low-interest mortgages before rates started skyrocketing two years ago. The average rate for mortgages currently held by homeowners is about 4 percent, while the current 30-year interest rate for those looking to buy a home is about 7 percent, according to a new report from the Harvard Joint Center for Housing Studies. on the state of housing in the United States.
“After locking in fixed rates with lower monthly payments, homeowners as a whole are paying less toward home debt service as a percentage of their income than at any time since 1980,” the report said.
As real estate prices skyrocket, property owners find themselves at historic levels of home equity. The average homeowner’s equity has climbed $28,000 over the past year, reaching an average of about $305,000, according to Corelogic.
But even many of these lucky homeowners are increasingly struggling with the rising costs of home insurance premiums, home repairs and property taxes. And they can’t afford to move.
Low-income people, older adults and people of color are among the most vulnerable. Their options to move or downsize are increasingly limited due to high mortgage rates and the scarcity of smaller, accessible housing.
The number of cost-burdened homeowners – those who spent more than 30% of their income on housing and utilities – increased by about three million people between 2019 and 2022. Most of this increase is among those who earn less than $30,000 per year. According to the Harvard report, 30% of black homeowners and 28% of Hispanic homeowners face high costs, compared to 21% of white homeowners.
“All-inclusive monthly costs for a median-priced home in the United States are the highest since these data were first collected more than 30 years ago,” the Harvard report said.
Insurance costs have risen dramatically in communities across the country – due to both increasingly severe climate problems, including floods and fires, and the high cost of building and repairing houses. Nationally, average homeowners insurance premiums increased 21% between May 2022 and May 2023, according to Policygenius.
“Even if they don’t pay a lot of mortgages or property taxes, maintenance, both in terms of costs and labor, often represents a heavy burden for these households,” said Jenny Schuetz, economic expert Urban and Housing Policy at Brookings. Institution, told Business Insider earlier this year.
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