Amid rising interest rates and soaring home prices, fewer than three in ten prospective buyers succeeded in purchasing a home last year.
According to a recent survey by financial services firm NerdWallet, only 28% of those who planned to buy a home in 2023 were able to do so. The report attributes this trend to home prices rising by 33% since 2020, coupled with mortgage rates more than doubling to exceed 6.5%.
Among those who failed to buy a home, 18% cited affordability as the main barrier, while 16% reported making unsuccessful offers, and 14% struggled to find suitable properties. Additional obstacles included limited housing inventory, high mortgage rates, strict loan qualification requirements, and increasing homeowners insurance costs.
Jee Lee, director of the Shalom Center, noted that “home price increases have outpaced income growth, weakening purchasing power. High mortgage rates and tight inventory have forced many prospective buyers to hesitate or abandon their plans.”
Experts believe last year’s market conditions were particularly challenging for first-time buyers, as rising prices and mortgage burdens made it difficult to afford homes within their planned budgets. The survey found that the median budget among respondents was $150,000, significantly lower than the national median home price of $420,400 reported by the IRS.
This affordability crisis has led to a sharp decline in first-time homebuyers. In 2023, they accounted for only 24% of all home purchases, the lowest percentage recorded since the National Association of Realtors (NAR) began tracking the data in 1981.
Among non-homeowners, 35% cited high living costs as the primary reason they couldn’t buy a home, compared to just 22% of current homeowners. First-time buyers also faced additional financial barriers, with 33% stating they couldn’t afford a down payment, 32% pointing to insufficient income, and another 32% struggling with low credit scores.
In contrast, existing homeowners were more concerned with high mortgage rates, a factor contributing to the ongoing housing supply shortage, as fewer homeowners are willing to sell in the current market.
Experts caution that mortgage rates are unlikely to return to the 3% range anytime soon, meaning that today’s market conditions may become the new norm for homeownership.
BY HOONSIK WOO [woo.hoonsik@koreadaily.com]
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