Housing Inequality
Rising interest rates are pricing out younger generations from the housing market. This is a fact.
The average 30-year mortgage rate has more than doubled in the past year, from 3% in January 2022 to over 7% today. This means that monthly mortgage payments for a median-priced home have increased by over $1,000 per month.
For younger generations who are already struggling to afford a down payment, rising interest rates are making it even more difficult to buy a home. In fact, a recent study by the National Association of Realtors found that only 23% of millennials own a home, compared to 36% of Gen Xers and 48% of Baby Boomers at the same age.
The housing crisis is having a devastating impact on younger generations. It is making it harder for them to start a family, build wealth, and achieve financial security.
Why are interest rates rising?
The Federal Reserve is raising interest rates in an effort to combat inflation. However, rising interest rates are also having the unintended consequence of making it more difficult for people to afford homes and other major purchases.
What can be done?
There are a number of things that can be done to address the housing crisis and make it easier for younger generations to buy homes. These include:
Building more affordable housing: The government needs to invest in building more affordable housing units. This will help to increase the supply of housing and make it more affordable for everyone.
Expanding access to down payment assistance: Down payment assistance programs can help younger generations save up for a down payment and purchase a home. The government needs to expand access to these programs and make them more affordable.
Reforming the mortgage market: The government needs to reform the mortgage market to make it easier for younger generations to qualify for loans. This could include reducing the minimum down payment requirement or expanding access to alternative mortgage products.
