Homeownership has long been a critical component of the American Dream. But under Bidenomics, owning a home is beyond the reach of many Americans due to the rising cost of owning and maintaining a home, according to the latest report by The Wall Street Journal.
Buying a home is more than having a roof over one’s head. Homeownership is the primary driver that has helped generations of Americans build wealth. A home is an appreciable asset, and its value usually increases substantially over a long period of time. Naturally, the primary residence represents the most significant asset among American households. According to the Census Bureau, homeowners’ median net worth is 80 times larger than renters’ median net worth.
However, owning a home has become very expensive under President Joe Biden. His excessive spending caused record-high inflation. The Federal Reserve had to hike interest rates dramatically between 2022 and 2023, seeking to bring inflation rates down. Consequently, mortgage interest rates spiked from around 3 percent in 2020 to over 7 percent.
Every percentage point increase in the mortgage rate means buyers must pay hundreds and thousands more for the same home or get less home for their money. According to Bankrate.com, the rising mortgage rates mean that as of July 2023, “homebuyers on a $3,000 monthly mortgage payment budget have lost $30,000 in purchasing power since February 2023 alone. In other words, they can afford to purchase a $450,000 home in July, compared to one priced at $480,000 five months ago and at $510,000 one a year ago.”
The Wall Street Journal finds that “homeownership affordability fell to its lowest level since the 1980s as mortgage rates reached a 23-year high and home prices set new records.” Consequently, more and more Americans have given up saving for a house down payment and been forced to miss out on the lifestyle they had hoped for. A Bankrate.com survey revealed that 1 in 4 Americans said the lack of housing affordability and having to rent (rather than own) makes them feel financially insecure.
Read full article from thefederalist.com.
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