Real Estate Paradox
Works Cited:
https://www.economist.com/finance-and...
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Real Estate Paradox: High interest rates but also high prices
Can you guess the thing that American report they want the most out of life? It is homeownership.
This is lies at the heart of the American dream. However, the American dream has rarely ever been this hard to attain. Prospective homeowners face a triple threat of high prices, costly mortgages, and low housing supply. This had led to a feeling in the country that home ownership is unaffordable and there is little sign of this changing in the future.
Housing is usually some of the most sensitive sectors to interest rates. However, economics has never been so convoluted as today.
After the Federal Reserve went on the offensive against interest rates, mortgage rates soared from 3% to 7% in less than two years. The mortgage payment for the median home doubled from roughly 14% of monthly income in 2020 to nearly 29% in June. This is the highest rate since 1985.