Mackenzie Bathgate and her husband, Jon, have been trying to buy a home in Lansdale, Pennsylvania for eight months now.
“At this point we saw 28 houses in person, but ended up making seven different offers, each a bit more aggressive than the last just because we were so fed up,” Bathgate said. “It’s supposed to be exciting and it’s the opposite.”
Bathgate said they waived inspections and offered tens of thousands of dollars above asking price, and still no luck.
Meanwhile, they have seen interest rates climb higher and higher, with each increase adding to the pressure to find their home.
“That’s when we started to feel all this stress like, ‘Oh my God, we have to make sure that every weekend is focused on visiting those three specific houses that we’re interested in,’ because we know they will have an accepted offer by Monday.”
The couple are now exhausted and have decided to put their research on hold, just as the Federal Reserve has raised interest rates again.
On Wednesday, the central bank raised rates by three-quarters of a percent. It’s the fourth time this has happened this year – a pace the United States hasn’t seen since the late 1980s.
The average 30-year fixed mortgage rate is now around 5.5%, almost double what it was at the start of the year, based on Freddie Mac. These higher rates, combined with already high house prices, mean that it has become much more difficult to buy a house, even if the competition could be a little less stiff.
“Nationally and locally, we are seeing a cooling, a decrease in demand and an increase in supply,” said Ashley Jackson, realtor at Realty Austin in Austin, TX. “We’re seeing that across the board, which is what you would expect with such an increase in interest rates.”
Jackson said the white-hot real estate market had gotten sellers and agents accustomed to properties being foreclosed on within days and inundated with 20 or more offers for a listing, many of which exceeded the asking price.
“[Sellers] may get a little frustrated if their home sits on the market for 21 days, which is actually still pretty good. So that’s just the narrative,” said Jackson, who is also the 2022 president-elect of the Austin Board of Realtors.
But the frustration didn’t end for homebuyers, who battled a competitive market and continued interest spikes.
Sienna Connor is currently renting an apartment in Iowa City with her husband, Rex, and their two babies. The Connors began considering buying a home in 2020, just before the pandemic hit, but the bank said they weren’t ready.
“We were told by a mortgage lender that our credit needed to be a little higher. It took us a few years to save for a down payment and closing costs and so on,” Sienna Connor said.
Finally, this month, they were pre-approved at a 5% interest rate. But that rate doesn’t lock in until they’ve accepted an offer on a home. And with all the time it took to save and build credit, Connor said they may have missed their window.
“A few years ago, we probably would be able to afford a decent three-bedroom house for our family. But once the interest rate goes up, we will effectively be locked out of this whole area,” he said. she declared.
Others may have found opportunities in raises, such as Peter Heuer and his wife, Cathy Yount. After a long search, they are finally in contract on a house in Rochester, New York.
“I think they [higher interest rates] actually helped us, personally, because they reduced the competition a lot,” said Peter Heuer. “So the last two offers we submitted, including the last one, which was successful, we only had a few offers on the property as opposed to 10 or 20.”
Courtesy of Peter Heuer
Heuer said he was pleased with the stability and freedom that home ownership would provide for him and his family. But for the Bathgates in Pennsylvania, the Connors in Iowa and countless other Americans, those luxuries seem more out of reach than ever.
For Bathgate, it’s simple.
“We just want a house,” she said. “We just want to have a family and a garden and be able to have a beer on our patio at the end of the day. And that’s disheartening and I feel like the American dream is no longer achievable.”
This story was adapted for the web by Manuela Lopez Restrepo.