Did you buy a house before 2022? If the answer is ‘no,’ you will likely be on the wrong end of financial inequality over the next decade — here’s why
If you bought a house before 2022, then you should count yourself among the fortunate.
The rise in mortgage rates coupled with still steep housing prices in most markets is quickly putting housing affordability out of reach for many.
While everyone is struggling, the situation is especially acute for first-time buyers — and it’s preventing them from building the kind of financial security that comes with owning a home.
And since homeownership is the primary source of wealth for most families, it’s only serving to exacerbate a wealth gap between those who own homes and those who don’t.
Chances are good you’re overpaying for home insurance. Here’s how to spend less on peace of mind
A TikToker paid off $17,000 in credit card debt by cash stuffing
Invest your spare change and turn your pennies into a productive portfolio
How we got here
During the Great Recession, housing prices dropped 33% across the country. But the historically low interest rates that followed made for a pretty good buying opportunity.
In the decade that preceded the pandemic, the value of owner-occupied housing climbed back up. In nearly 100 metros, home values rose more than $8 trillion, according to a report from the National Association of Realtors.
But it was the ultra-low interest rates during the pandemic years that encouraged a boom in buying, causing house prices to spike to historic levels in many areas — and pushing homeownership out of sight for many.
Since the beginning of the pandemic, the cost of owning a home has hit new heights. According to Zillow’s August housing report, the monthly mortgage payment on a typical home bought in 2022 has almost doubled since 2019, going from $897 to $1,643.
That makes it doubly hard to actually get your footing on the property ladder, if you aren’t already. But it also means that people who owned before pandemic demand sent prices soaring have the advantage of a lower mortgage payment and, very likely, a lower locked-in interest rate.
They’re paying that much less every month for housing than the person who bought during the pandemic, or since interest rates began rising in mid-2022.
The disparity is growing
Which means the net worth of homeowners is rising a lot faster than it is for non-homeowners.
That being said, there was already a significant gap. The median household net worth of homeowners was about 40 times higher than that of renters before the pandemic, according to a survey released by the Federal Reserve in 2020.
The data shows that American homeowners, pre-pandemic, had a median net worth of $255,000, while renters had a net worth of just $6,300.
Now, there’s likely a much greater difference thanks in part to home equity and rental prices.
Nearly half of American homeowners were considered “equity rich” by mid-2022, according to ATTOM’s U.S. Home Equity and Underwater report.
It’s the highest percentage ever seen, said Rick Sharga, executive vice president of market intelligence at ATTOM, which collects housing data from markets across the country. To be equity rich means that the loan on your house is half, or less than half, of the estimated market value of your house.
But it’s concentrated in certain areas
But not every corner of the country has been equally impacted. Eight of the top 10 equity-rich states are in the West, while 12 of the 15 states with the lowest percentages of equity-rich homes were in the Midwest and South.
At the same time, rental prices have sky-rocketed in major metros.
The average rent for a one-bedroom in New York City, according to online apartment search engine Zumper, is nearly $4,000. That’s a year-over-year jump of 20%. In San Francisco, the average one-bedroom is $3,000 — 10% higher than last year.
If you’re paying rent in a major city, it’s going to be hard to save for a down payment, putting homeownership that much further down the line.
It stands to reason that those who have homes, and who bought them at the right time, will continue to see their net worth increase. While people who haven’t bought will continue to fall behind — especially if they live in an expensive city.
What to read next
‘This truck can’t do normal truck things’: YouTube star says towing with Ford’s new electric pickup is a ‘total disaster’ in viral video — but Wall Street still likes these 3 EV stocks
‘I just can’t wait to get out’: Nearly three-quarters of pandemic homebuyers have regrets — here’s what you need to know before you put in that offer
‘Remarkable reversal’: President Biden just (quietly) scaled back student loan forgiveness — and the change could impact up to 1.5M borrowers. Are you one of them?
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
The singer gets candid on a range of topics, including politics, abortion rights, race and her romance with “life mate,” Myke Wright.
An Asian American family in Santa Clara, California, has pressed charges against two boys who allegedly chased a family member before punching him multiple times just outside their home. Nina Leslie, who posted the video on Instagram on Monday, said her younger brother — who is also a minor — was walking her dog when the two boys followed him. In the video, the alleged bullies can be seen cornering Nina’s brother at their own doorway.
What was supposed to be a 5 1/2-hour rail trip from Detroit to Chicago turned into a 19-hour ordeal for passengers on an Amtrak train that lost power, leaving them without light, heat or running toilets. Amtrak has apologized to passengers and offered transportation vouchers, MLive.com reported. The train stopped there due to the power problem, Amtrak spokesman Jason Abrams said.
As the new school year swings into gear, some students carry heavier worries than keeping up with homework: Demand has been growing steadily for children’s books that address traumatic events such as school shootings. As anxiety and depression rates have soared among young Americans, educators and advocates say children’s books can play a role in helping them cope. “While it might be second nature to try to shield kids from the harsher realities of life and scary news, it’s proving difficult to avoid big society issues,” said Kristine Enderle, editorial director at Magination Press, the children’s book publishing arm of the American Psychological Association.
Don’t assume the worst is over, says investor Larry McDonald. McDonald, founder of The Bear Traps Report and author of “A Colossal Failure of Common Sense,” which described the 2008 failure of Lehman Brothers, expects more turmoil in the bond market, in part, because “there is $50 trillion more in world debt today than there was in 2018.” The bond market dwarfs the stock market — both have fallen this year, although the rise in interest rates has been worse for bond investors because of the inverse relationship between rates (yields) and bond prices.
“He’s in good spirits,” RHOA alum NeNe Leakes said of her son Brentt Leakes, 23, who was hospitalized last month
Harris urged voters to keep the legalization of marijuana in mind when voting in the upcoming midterm elections.
In a video posted to Twitter, the former U.S. congresswoman from Hawaii and 2020 Democratic presidential candidate said she can “no longer stomach” the “woke” direction of the party.
ProFootball Talk on NBC Sports
The streak of consecutive Monday Night Football player/non-player interactions resulting in a police report has now reached two. Last week, the police report filed by a trespasser who was knocked down by Rams linebacker Bobby Wagner was, in our view, a publicity stunt. This week, a worker who had every right to be in the [more]