Yahoo Finance How To Buy Your First House When the Market Is ‘Almost Impossible’
It’s no secret that the road to homeownership has been extremely difficult lately. Soaring mortgage rates, low inventory — partly due to the “lock-in” effect of owners not wanting to let go of the low rates they secured a few years ago — and high prices all are creating an arduous landscape for many Americans.
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During her testimony before the House Ways and Means Committee on April 30, Treasury Secretary Janet Yellen said it is “almost impossible” for first-time homebuyers to enter the housing market, according to Benzinga.
“With house prices having gone up, and now with much higher interest and mortgage rates, it’s almost impossible for first-time buyers,” Yellen said.
Indeed, following several weeks of decline, mortgage rates increased yet again. As of May 30, the 30-year average mortgage rate was at 7.03%, according to Freddie Mac. To put this in perspective, it was at 5.10% for the corresponding week in 2022, and 3.15% for the corresponding week in 2020, according to Freddie Mac data.
“This reality, as well as economic signals that have moved sideways over the last few weeks, have resulted in mortgage rates drifting higher as markets continue to dial back expectations of interest rate cuts,” according to a Freddie Mac statement.
Against this backdrop, what can first-time homebuyers do?
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Location, Location, Location
Choosing an area where homes are more affordable can be an option for buyers who are able to move.
For instance, some U.S. markets, such as those on Realtor.com’s 2024 Best Markets for First-Time Homebuyers list, include Irondequoit, New York, Newington, Connecticut and Winterset and Council Bluffs, Iowa.
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Housing Tax Credits
The Biden administration announced plans in March to lower costs via a slew of measures.
First-time homebuyers would benefit from a tax credit of up to $5,000 per year for two years, which would make homeownership more accessible and affordable. According to the administration fact sheet, this is the equivalent of reducing the mortgage rate by more than 1.5 percentage points for two years on the median home. The credit is expected to help more than 3.5 million middle-class families purchase their first home over the next two years.
Another measure is a one-year tax credit of up to $10,000 for middle-class homeowners who sell their starter homes — defined as homes below the area median home price in their counties — to other owner-occupants. The proposal will help an estimated 3 million families, according to the fact sheet.
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This article originally appeared on GOBankingRates.com: How To Buy Your First House When the Market Is ‘Almost Impossible’
