When Jennie Luhmann and her husband wanted to buy a house, imagining their daughter would grow up there, they quickly became disillusioned: few properties for sale, buyers paying cash, and interest rates climbing.
The couple visited several properties that matched what they were looking for, but each time were overtaken by buyers who raised the bids. They therefore had to resort to renting, before returning to live temporarily with Mrs. Luhmann’s mother.
“It’s not how we imagined ourselves at 37 and 42,” she told AFP.
“It was obviously a failure. We have a two-year-old child and we were really hoping to start our life together as a family,” said Jennie Luhmann, who lives in Pennsylvania (north-east).
She does not plan to be able to buy this year, given the situation of the real estate market in the United States.
Because sales prices are very high, while property loan rates have soared, and in August even reached their highest level for more than 20 years: more than 7.0% for a 30-year fixed rate, the more frequent.
Home ownership therefore seems out of reach today for some young American households, caught between their student debt to repay and the high cost of childcare, at a time when economic growth is slowing.
Millennials, or generation Y, born in the 1980s and 1990s, represented the majority of buyers between 2014 and 2022, according to figures from the American federation of real estate agents, NAR.
But they were overtaken this year by baby boomers, who have the means to pay in cash, without resorting to a mortgage.
“Inventory (of houses and apartments for sale) is incredibly limited, particularly among affordable properties,” notes Jessica Lautz, deputy chief economist at NAR.
There is a shortage of 5.5 million properties in the United States to meet demand, she says.
The Biden administration has certainly sought to reduce the housing shortage in the United States, and has partly lowered barriers to construction. But it will take time to observe the effects.
Joe Biden, who is seeking a second term in the White House, is struggling to turn things around in the face of negative sentiment about his management of the economy.
“We see that millennials are facing a very difficult real estate market, especially with rising interest rates,” adds Jessica Lautz.
Young American adults “also have a growing amount of student debt,” says the economist, and the resumption of payments in October after a pandemic-related pause risks further complicating the situation.
“There is such a lack of inventory that it has caused prices to skyrocket. I’ve been doing this for 40 years, I’ve never seen prices like that,” said Joan George, a real estate agent based in New Jersey (north). -East).
The house of the “American dream”, as she calls it, with four bedrooms, is becoming more and more inaccessible.
In the Philadelphia suburbs, it was around $450,000 before the pandemic, but at least $600,000 today, explains Kim Rock, another real estate agent.
“It’s obviously more difficult for young buyers who have more limited resources and liquidity,” she comments.
Among first-time buyers last year, 27% lived with a family member before purchasing, according to NAR data. This is the highest percentage since the 1980s.
And they’re older, too, with a median age of 36, up from 28 40 years ago.
A recent slowdown in the price of rent and real estate could slow down housing inflation “significantly”, however, anticipate researchers from the San Francisco branch of the central bank (Fed).
But in the meantime, housing is still driving inflation.
This worsens wealth gaps, notes Jessica Lautz. Thus, the situation is even more difficult for black and Hispanic first-time buyers, reflecting “growing housing inequality that is leading to increasing wealth inequality” in America.
13/09/2023 07:29:22 – Washington (AFP) – © 2023 AFP
