Buyers’ Blues

We’re still singing them in our area. Purchasing a house remains a struggle, especially for first-time buyers. While other US markets may have balanced, our local market has not. What are the drivers behind this challenge? 

I don’t think I need to explain the hike in interest rates. Some people I know secured an interest rate of 1.99% on a 15-year mortgage in February of 2021. As of this writing, average rates range close to  6% for a 15-year and around 6.7% for a 30-year mortgage. 

Housing prices continue to rise due to the imbalance in supply and demand. In the Greater Milwaukee Area, there aren’t enough houses to go around.

Cash. It’s still king. Buyers needing a mortgage will also need funds for a down payment. Additionally, they may need money to cover an appraisal gap or needed repairs. All of these expenses add up. Most first-time buyers are not flush with green stuff, and they lose out to their cash-positive competition.

The cost of living is not keeping pace with the rising cost of homeownership. The median household income now covers a smaller percentage of the price of the median household property.

Buyers, want some advice? Beef up your savings. Trim your budget and shove as much money as possible into a high-yield savings account. Adjust your expectations, bide your time, keep the faith. After all, people are still purchasing houses, and you can do it, too!