It’s been a hard few years for potential homeowners and it doesn’t look like things will get easier. Many hoped a Trump presidency would lead to lower interest rates, which would at least soften the blow of buying a house in an understocked, overpriced market. However, Federal Reserve Chairman Jerome Powell, stated in a recent speech that he doesn’t see any pressing need to bring rates down.
Fed chairman doesn’t plan to lower interest rates anytime soon
Inflation has lowered to 2.3%, which is close to the Federal Reserve’s 2% goal. Despite this, Fed Chairman Powell isn’t in a hurry to make further interest rate cuts. According to CNBC, in a recent speech in Texas, he stated, “The economy is not sending any signals that we need to be in a hurry to lower rates.” He continued, “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”
Unfortunately, if you’re looking to buy a house, you’re going to be stuck with high interest rates for the indefinitely. The national average for a 30-year fixed mortgage is currently hovering around 7%. For comparison, this is more than double the record low of around 3% we saw in 2021.
Compounding the issue is the fact home prices have skyrocketed. In 2020, the average price of a house sold in the U.S. was $370,000. As of writing that’s gone up to around $500,000. Unfortunately, this isn’t just the case in large cities, either. It’s a nationwide issue that politicians have largely ignored.
So, for the immediate future, high housing prices and high mortgage rates are going to make it difficult for Americans to pursue home ownership. Unfortunately, landlords are taking advantage of the situation and average rent is at record highs as well, which makes it that much harder to save the money for a down payment for a house.
Despite being a major issue for all Americans, neither Trump nor Harris made combating the housing crisis a key part of their campaign. Hopefully, when the new administration takes office, we’ll get some relief from this increasingly dire problem.
