Squeezed by high interest rates and record prices, homeowners are frozen in place. They can’t sell. So first-time buyers can’t buy.
If buying a home is an inexorable part of the American dream, so is the next step: eventually selling that home and using the equity to trade up to something bigger.
But over the past two years, this upward mobility has stalled as buyers and sellers have been pummeled by three colliding forces: the highest borrowing rates in nearly two decades, a crippling shortage of inventory, and a surge in home prices to a median of $434,000, the highest on record, according to Redfin.
People who bought their starter home a few years ago are finding themselves frozen in place by what is known as the “rate-lock effect” — they bought when interest rates were historically low, and trading up would mean a doubling or tripling of their monthly interest payments.
They are locked in, and as a result, families hoping to buy their first homes are locked out.
Instead of blaming people for the lack of housing on market because they are not moving out of their “starter homes” to buy bigger houses they don’t want or can’t afford, wouldn’t the obvious solution be to build more small houses/condos/townhouses?
There is plenty of empty land everywhere in America, so it’s not like housing is supposed to be some kind of finite resource. The way I see it, this is real estate developers attempting to shift the blame for their own shortcomings to the consumer.
My town is building a shit load of apartments and townhomes. Everyone on nextdoor hates it. I can’t entirely disagree either since infrastructure is lagging far behind for all the new residents.
Builders are artificially inflating prices by purposefully not building homes. They lobby for zoning laws that prevent the building of affordable apartment complexes and use it as an excuse for why they can’t build more homes. For example they will set an empty 1000 acres as commercial and say they can’t build there even though no one wants commercial buildings.