The latest Survey of Consumer Expectations from the New York Federal Reserve has shown that Americans are worried about housing costs going up soon. The report, which asked people in February about their thoughts, says that they expect home prices to increase by 5.1% in a year.
This is a big jump from the 2.6% increase predicted a year ago. Also, the survey says that rental costs are expected to go up by 9.7% in a year, which is the second-highest prediction ever in the survey’s history. This means it might be tough for people who want to buy a home or rent a place soon.
Looking further ahead, people expect home prices to go up by 2.7% in five years, which is not as much. But they’re worried about mortgage rates going up.
They think the average mortgage rate will be 8.7% in a year and 9.7% in three years, which would be the highest ever. This could make it hard for people to buy homes, making them less affordable and harder to get.
The effects of high mortgage rates reach beyond just people’s ability to afford homes. A report by Redfin says that fewer low-income Americans took out mortgage loans last year because of the high interest rates.
This makes it even harder for people to buy homes. Also, some homeowners are keeping their low-rate mortgages from the pandemic time, which means there are fewer homes for sale. This keeps prices high even though interest rates are going up.
So, the situation for future homebuyers is complicated. They have to deal with higher housing costs, rising mortgage rates, and fewer homes for sale.
The survey from the New York Fed, along with reports from Redfin and the Federal Housing Finance Agency, shows that buying a home will be tricky in the coming years.
People, banks, and policymakers need to think carefully about how to deal with these challenges in the housing market, which is being affected by bigger economic changes.
