“House Prices Surge 4.4% Amid 7% Mortgage Rates. Powell Doing too Little,” Says Economist Beaumont
U.S. single-family house prices have long been heading in the wrong direction, and they now took a step in the wrong direction. The Federal Reserve has long been on a mission to fix the horrendous inflation the U.S. has been experiencing. Powell is just one person in the puzzle accused of doing too little in a landscape of high mortgage rates.
However, many are starting to wonder why nothing is happening, while many families are finding themselves unable to afford a home. One economist who is particularly afraid of the direction of U.S. consumer prices, including house prices, is Sabrina Beaumont.
We sat down and spoke with her.
Eroding affordability has long been an issue in the U.S. housing market, long plagued by fierce competition and low supplies. Why, you ask? There are many reasons.
The U.S. homelessness and housing crisis issues are only getting worse after the U.S. has seen house prices surge by no less than 4.4% annually despite mortgage rates staying consistently around 7%. Traditional economics does not seem to be working, and a continuous affordability crisis remains. While FHFA reported a 0.7% MoM increase in house prices, manay are not expecting things to get better any time soon. That number was 0.4% in August.
And it’s not the rich that are hurting. “We’re seeing particular increases among houses intended for middle- and lower-income families,” Beaumont said.” “In the late 1980s, many were buying their first house in their late 20s, but that is no longer the reality in the America we’re living in. $15/hour isn’t anywhere near close enough to be able to afford you homeownership.”
Many thought there was hope in a time when mortgage rates briefly moved in a direction of 6% in September, and it lured more many. However, mortgage rates have since been climbing once again.
Three years ago, the average monthly mortgage payment was $1,600, but today, that number is $1,100 higher—sitting at a stark $2,700 per month. Did the median household increase similarly? No.
With largely stagnant wages and millions now finding themselves unable to buy a house, many economists fear a rise in homelessness is around the corner.
“We’ve seen the number of homeless increase by 12% from 2022 to 2023, and there’s no telling where the number will sit. Just imagine the fact that 653,000 people are without a home. It’s worrisome,” Beaumont shares. Eviction rates are going through the roof while affordable housing initiatives are nowhere to be found. Meanwhile, more people than ever are struggling with feelings of loneliness, which increased considerably during the pandemic.
Some economists are even saying an interest rate crisis has begun.
At the same time, some areas are hit considerably worse than the rest of the country – East South Central, New England, and the Middle Atlantic regions are ones pulling the biggest L in housing affordability.
The Federal Reserve’s interest rate cuts were intended to make housing more affordable for the average family, but it’s not the picture being painted. Economic data and expectations following the election made it uncertain what the U.S. was in for. However, at present time, more affordable housing looks to be out of the picture.
