Housing and the American Dream
Owning a home has long been the American Dream. But for many young Americans, it’s a dream deferred.
When the college Class of 2012 graduated, the average cost of a home in the U.S. was $271,800. A grad who started saving with the goal of homeownership 10 years down the road could anticipate a price of about $355,000 in 2022, and a mortgage rate of about 3.6%, if inflation remained roughly unchanged. A standard 30-year mortgage with 20% down would cost that graduate about $572,000 over the life of the loan.
So she saves up toward that goal. By the time of her 10-year reunion, she thinks she’s on track. But at today’s average home price and 6.94% mortgage rate, that same house will cost her $941,000.
That’s probably why existing home sales are down for an eighth straight month, the longest streak of declines in 15 years. And there’s no end in sight, with the near certainty of more interest rate increases.
Nancy Vanden Houten of Oxford Economics told The Wall Street Journal: “The housing market has entered a recession before the overall economy does.”
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