The Reality of Buying a Home in Biden’s America

New Africa /

Have you looked at buying a home recently? The concept should terrify you to your very core.

Everything in Biden’s America is more expensive – and the cost of buying a home has increased dramatically in the past six months. Not only are homes still inflated due to COVID but there are now higher mortgage rates than there’s been in years.

Just a year ago, the mortgage rates were low. It was encouraging people to buy homes – even though homes were more expensive because of the demand. Many sellers were able to get tens of thousands of dollars above the asking price. Buyers with cash were able to get a home quickly. Those looking to finance were forced out of the market or forced to get mortgages that were higher than what they could afford.

Fast forward to the start of 2022 and Fannie Mae predicted that the 30-year fixed mortgage rate would climb to 3.3% by the end of the year. The Mortgage Bankers Association took a more bullish approach with a 4% prediction.

Zonda is a real estate research company that has been running the numbers. The chief economist of Zonda, Ali Wolf, announced to Fortune that “the impact of rising interest rates depends on where they land. If rates approach 4% before the end of the year, there will be a notable downshift in housing demand.”

Wolf was clear that if the interest rates were gradual, sellers could price homes accordingly. If the interest rates rose too quickly, it would be a “shock to the system.”

Guess what? We’re at the shock point because we’re not even at the end of the year and the 30-year fixed mortgage rate is at 6.28%. It’s jumped by over 3% since the beginning of the year – and it’s the highest rate that we’ve seen since 2008. The massive increase in rates hasn’t been seen since 1981.

Banks have a number of requirements in order to hand out mortgages. The debt-to-income ratios are harder to achieve with higher mortgage rates because the monthly mortgage payment is now out of many people’s financial capabilities. Potential homeowners have lost their mortgage eligibility in a matter of months.

The cost is dramatic – and it’s just like the spike that renters are seeing.

If a homebuyer bought a $400,000 home with a 3.1% 30-year fixed-rate, the mortgage payment would be $1708 per month. Now, factor in that same priced home with a 6.28% rate and the payment comes down to $2471.

The reality, though, is homes are still skyrocketing in value. The $400,000 home can now sell for $480,000. So, if a person can still secure a mortgage, they aren’t going to pay $1708 a month or even $2471 a month. Instead, they’re looking at $2965 – and that’s just for the principal and interest. Many still have to account for escrow to include homeowner’s insurance and property taxes.

Zonda’s data shows that a new mortgage payment across the 100 largest regional housing markets has increased by 52% in the past six months.

San Jose, California is where the most expensive housing market is in the U.S. Mortgage payments increased the most, jumping from $5304 to $8185.

Only now are buyers finally deciding that they don’t want to become homeowners that badly. They don’t want to pay thousands more per month for a home simply because they’re living in Biden’s America.

Home sales are down. Mortgage applications are dropping. More buyers are choosing to wait on the sidelines to see what happens. It makes sense. Why buy now when the home prices could start to drop, or the mortgage rate could drop at any moment?

Most analysts believe that a recession is coming. Should that happen, home values will likely only drop by 5%. 15% in some of the more overvalued markets.

Essentially, it means that inflation hit the country harder than anticipated. And the effects are going to stick around longer, too.

If you’re looking to buy a home, try to wait a few months until the market cools down…at least a little bit. And when you have to pay more for your home and your mortgage, just remember who is responsible once you head to the polls.