Thinking about buying a family home in America? You might want to give it some thought.
High-interest rates and inflated prices send home sales on a downward spiral, analysts confirm. The latest data from the National Association of Realtors shows that sales are off 2.4 percent compared to February 2021.
Even though November and other months showed signs of stabilization, the analysts are not pleased with the numbers that keep going down.
Why Have Home Prices Been So High?
According to The Wall Street Journal, low supply and high demand are one of the reasons why American buyers are having a hard time buying their dream homes. The lack of inventory in the market forces potential buyers to boost their bids with higher-than-usual price offers.
The sky-rocketing price tags are also caused by high mortgage rates that continue to soar. A spike in mortgage rates has been eating up heavily burdened middle-class family wages who barely keep their head above water. Many homeowners are even facing foreclosure.
Are Home Prices Likely to Drop in 2022?
Experts are not so optimistic that prices will drop in 2022. Assuming that inventory continues to fall year-over-year and rates stay roughly the same, home values could continue to rise at the same pace.
Additionally, interest rates are expected to gradually increase over time, which will not help promote a significant decrease in home values.
The Russian invasion of Ukraine also needs to be factored in since it has fueled inflation already pushed up by pandemic-driven prices of goods, oil, and services.
"We may be approaching a pivot point when higher home costs and higher mortgage rates cool both sales and price increases, but given the supply-and-demand imbalance, we may not hit that point this year," said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.
How Are Families Coping With Volatile Housing Market
Given the volatility in the U.S. economy, uncertainty in the housing market, and the world at large, it comes as no surprise that many Americans were eking out a living. Some of them were forced to move out of their homes.
In 2021, the Biden administration rolled out their plan to tackle the issue of affordable housing short supply. As part of this action, the government vowed to build and sell 100,000 housing units over the next three years.
Biden also promised to increase funding for rental housing vouchers and affordable housing construction.
Meanwhile, the government will continue to invest in programs like infrastructure, clean drinking water, education, home healthcare, child-care facilities, and paid leave.
Under the new bills unveiled last April, every American would be entitled to tuition-free community college. The plan covers subsidized tuition for minority students, free preschool for 3- and 4-year-olds, paid family and medical leave.
Biden has received a lot of flak from the GOP over his announcement of the American Jobs Plan and American Families Plan bills. "Building a national child-care enterprise of some kind, run by the federal government, is not my idea of the best way to give families the options that they would like to have," said senator Mitt Romney.
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