(StraightNews.org) — A Housing Affordability Survey by the Cato Institute has found that 55% of American homeowners would not be able to buy their homes at current prices. The survey also found that 87% are worried about rising house prices across the country. Prices have skyrocketed in 2022 and some economists are warning that a housing recession is already here.
In October, the interest rate on a standard mortgage rose to 7%, which is the highest single-year increase for more than 5 decades. At the start of 2022, the rate was 3%. Nadia Evangelou, a senior economist at the National Association of Realtors, said the difference between 3% and 7% could amount to an extra $1,000 a month for homeowners to pay. Around 1 in 10 American homeowners are currently on adjustable-rate mortgages that will adjust to the new percentage rates.
Some economists believe the rate will settle at around 6.5% in 2023, but latest figures are likely to exacerbate a growing cost of living crisis across America.
The US Bureau of Labor Statistics reported in December that the cost of living had risen at levels not seen for decades. The consumer price index showed prices had risen by 7.1% since November 2021. Housing costs however are the largest single contributor to increasing monthly outgoings in American homes.
Other essential items to surge in price in 2022 included gas, which rose to $5 a gallon in the middle of the year but has settled to just over $3 – around 70 cents higher than at the end of 2021. This is expected to rise again to $4 in 2023. The Department of Agriculture reported on December 22nd that food prices were 10.6% higher in November 2022 compared to the same month in 2021. The Department predicts a further rise of between 3.5% and 4.5% in 2023.
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