The housing market continues to leave homebuyers struggling to find affordable options as mortgage rates surge and inventory remains scarce.
One industry expert highlighted changes facing buyers trying to combat the new real estate terrain.
“We’ve been stuck in this cycle now really since COVID. I think that people are just kind of waiting for things to change, and it might not ever change,” The Rogers Healy Companies CEO Rogers Healy said on “America’s Newsroom” Thursday.
“I think that real estate continues to drive our economy. And I think people are going to hopefully find a way to bring out some kind of miracles in the world of real estate. And it’s going to obviously be around interest rates, if not other options as well,” he added.
Across the nation, many middle-income earners are being priced out of the American dream due to rising home costs and mortgage rates. Those who do buy are often settling for more costly options, making many house-poor and struggling to make ends meet.
Healy pushed back, however, and said the buying trends – driven largely by millennials – are caused by a new perspective on homeownership.
“We’re just seeing kind of everything changed. Buying a home is still the American dream, but the people that we were blaming five years prior are the ones that are leading the market. And it’s millennials,” he said.
“I think that people are looking at real estate as more of an investment, even if it’s their primary residence, which means maybe the emotional attachment is not there like it used to be.”
As of Thursday, Freddie Mac reported the 30-year fixed mortgage rate averaged 7.18%, which is down from last week’s 7.23% rate. Compared to 2022, the rate is up almost 2%.
The 15-year fixed mortgage came in at 6.55%, unchanged from last week; however, the rate is up roughly 1.5% more than this time last year.
Americans are already pinching pennies due to the crippling cost of inflation, so rate hikes only further exacerbate financial hardship.
Healy offered an alternative perspective based on market changes, challenging homebuyers to approach buying a home as a short-term investment.
“The trends have changed drastically even in the past year, year and a half. I think people are now buying the house with the anticipation of not staying there maybe more than 2 to 3 years. In a situation like [this], maybe you go refinance in a year and get your interest rates down to maybe under 4%, if that continues to be the dream,” he said.
“So if you find something that you like enough, go ahead and get it, get the house and realize it’s not a forever thing. And again, that’s just really not what the mindset was five years ago and prior.”
In addition to high mortgages, there’s also a nationwide housing supply crunch: sales of previously owned homes tumbled 2.2% in July, while the National Association of Home Builders reported new home construction sentiment dropped six points in August.
The real estate expert noted that millennials are the largest generation and will be “driving the market,” especially as those individuals start families. Given the housing supply shortage and the growth among millennials, Healy was concerned about whether the market can “keep up” with demand.
“We just cannot keep up with it,” Healy said. “As millennials start to go and have families and grow their families, we’re going to need larger spaces, which means the demand for real estate is going to continue.”
While housing supply is slim, there is the added problem of square foot shrinkage. According to one estimate from Livabl by Zonda, the average size for new housing has decreased 10% nationally.
“The one thing you can’t build is more land,” Healy said. “So if you think about it, they’re going to go and maximize their dollars, so they’re going to have smaller houses on smaller land. And then also, on top of that too, the nationwide rental average is approaching $2 a foot.”
“So I think that we’re just going to keep talking about this until we’re blue in the face, but there’s not going to be a real estate crash any time in the near future.”
FOX Business’ Kristen Altus contributed to this report.