Rate hikes, high prices leave first-time homebuyers ‘frustrated’
The Fed’s rate hike, red-hot real estate market add to borrowing costs
FOX Business' Gerri Willis reports from Hartsdale, New York, where first-time homebuyers are struggling with high market prices.
First-time homebuyers are growing increasingly "frustrated" by interest rate hikes and pricey properties presenting new challenges to an already red-hot real estate market.
"Only in New York, in Westchester, can I make a six-figure income and have to move into my parents’ basement to try and save more money to be able to afford a home," first-time buyer Sal Costello told FOX Business’ Gerri Willis.
Costello, who’s been looking for a house with his wife for a year and a half, hasn’t been able to close a deal after making three separate offers – and he’s not alone.
Half of homebuyers say their top concern is affordability, according to a U.S. News & World Report survey out this month. Census data shows the median sale price of new homes was $400,600 in February 2022, up from $362,000 one year ago.
RENTAL AND HOME PRICES EXPECTED TO RISE EVEN MORE THIS YEAR, FORCING SOME TO PACK UP AND MOVE
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But there’s another hurdle in the way: 30-year fixed mortgage rates have now hit 4.16% according to Freddie Mac, reaching their highest levels since 2019. Also, the Fed’s recent rate hike has led to rising borrowing costs, adding onto already historic highs for home prices.
A recent study from Zillow found actual home price increases are running faster than people make in an entire year, projecting price growth to reach 22% year-over-year in May.
"In Silicon Valley, average prices went up $229,000 year-over-year," Willis reported on "Varney & Co." Wednesday. "That's $136,000 more than people made. So these prices are out of control, people are struggling."
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Rent and home prices have seen major increases over the past year and in some places, they've hit record highs.
With bidding wars and all-cash offers saturating the market, one real estate expert is encouraging buyers to look beyond what’s shiny and new.
"The smart move is to have your agent look for houses that have been on the market for two weeks or more," Chad Morton of Maverick Realty previously told FOX Business. "If something's on the market for more than two weeks, there's an issue, but that is an opportunity for you."
FOX Business’ Breck Dumas contributed to this report.