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.
People who bought a house during COVID times were really expecting to sell their house after only a few years? I wish we could have bought a house then. I’d love to be stuck in a house.
There are a lot of lemons with “starter” homes. They’re usually more likely to be older and have more problems. People buy in, realize they got fucked, then want to sell instead of losing their ass on renovations.
Since the housing supply is extremely low, people make offers with zero contingencies / no inspections. If you want to inspect the home, you need to be offering way over asking, otherwise you’re just going to be passed over for someone else’s offer.