The pandemic forced a lot of people to vow not to put off the things they want to do for another day.
The housing market was one of those top line items. But after a bruising two years of sky high prices and dwindling inventory, it seems a lot of younger buyers have decided they would much rather sit this one out.
A recent poll backs that up: The number of Americans who say that now would be a good time to buy a house hit an all-time low of 25% in a recent Fannie May survey.
Young People Hit The Hardest
Younger people have been especially hard hit by the lack of affordable homes.
An analysis from Zillow Group Inc. found that home prices are rising the fastest in suburbs, and that’s an increase likely to continue as a record number of millennials approach what’s traditionally been home buying age for Americans.
Fannie Mae also found that young people expect mortgage rates to continue to rise, with the Federal Reserve attempting to correct what it has said is an economy headed in the wrong direction.
The Fannie Mae survey polled approximately 1,000 people via live telephone interviews between Jan. 1 and Jan. 24.
Respondents polled reported that they were worried about losing their job over the next 12 months, a number that rose to a 10-month high for the regular survey.
Even though the labor market added a record-setting number of new jobs in January, fears about inflation and general market instability are eating away at people’s confidence.
In general, pessimism is on the rise for people who once dreamed of buying a home once they hit their 30s. They also think rental prices will rise to record levels this year as well, as it seems they can’t catch any kind of a break.
Why Are People Feeling Pessimistic About Housing?
The pandemic brought about a surge in housing prices, with more buyers competing in expensive markets for fewer inventory and less new houses being built, which decreased supply.
But at the time, unemployment and stimulus payments from the federal government, as well the Federal Reserve lowering mortgage rates to help stabilize the economy, led to lower interest rates that helped increase demand.
Because of the surge in demand and the contraction in supply, the U.S. National Home Price index rose by 18.6 percent over the last year, according to The White House.
This is great for homeowners but less great for people looking to buy with limited means, as people’s incomes are not keeping pace with the increase and inflation balloons.
Over the last decade, home prices have risen roughly 30% and incomes have only increased by 11% over the same time period, according to CNBC.
As a result, there’s fewer and fewer houses available. The ongoing supply chain blockage is also driving up the cost of a new house precipitously, from $389,400 between 2017 and 2019 to $443,200 in August of last year.
Time To Sell?
There was some good news for people who did manage to buy a home before things went haywire.
With fewer choices on the market and prices at record highs, people said they think now would be a perfect sellers market for anyone who does own a home.
Per the same poll, 69% of respondents reported that they think now is a good time to sell, an all-time high in the series that dates back to 2010.
Incomes Are Also Wobbling
Fannie Mae's poll found that younger respondents are also dealing with incomes that haven't managed to remain stable through the pandemic's rollercoaster two years.
For about three-quarters of respondents, they saw their income change. But some did experience a slight uptick in what they have managed to bring home for their budgets.
"The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 23% to 26%, while the percentage who say their household income is significantly lower decreased from 17% to 14%," the poll reads.
"The percentage who say their household income is about the same decreased from 59% to 56%," it said. "As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 6 percentage points month over month."
