What Today’s Real Estate Trends Say About the American Consumer
At first glance, the United States consumer looks remarkably healthy. Unemployment is low. Spending is strong. And many Americans are sitting on impressive gains in both their investment portfolios and their homes. But dig a little deeper, and you will find a story of two very different Americas — especially when it comes to housing.
Here’s the headline: The timing of when you bought your home may now matter more than whether you own one at all.
Homeowners who bought before 2021, when mortgage rates were near historic lows, are in an enviable position. Many are locked into 30-year fixed loans with rates under 4%, even as current rates hover near 7%. Their monthly housing costs have not changed, but their home values and investment accounts have likely grown. In an inflationary world, that is an incredible advantage.
Contrast this situation with that of recent buyers. Those who purchased in the past few years are often spending two to three times more of their monthly income on their mortgage. That does not leave much room for error — or for savings. And as rates remain high, many would-be movers are choosing to stay put, creating a “lock-in” effect that has kept housing inventory low — until recently.
In the past year and a half, inventory has started to rise, particularly in states like Florida, Texas and the Carolinas. This has led to some early signs of price softening in those regions, though nothing like the crash we saw in 2008. In fact, mortgage credit remains strong overall and foreclosures are still rare.
What does this all mean for investors and homeowners? First, it is a reminder that national averages can be misleading — some consumers are thriving while others are under pressure. Second, it
highlights the power of long-term planning. Those who were able to purchase with stable, low-cost financing now have a cushion against today’s higher prices and interests. Those who have had to enter the market during an era of higher rates should keep an eye on conditions so they can improve their situation when the opportunity arises.
As always, our job at Anchor is to help clients navigate both the headlines and the fine print. If you have questions about how the current environment affects your financial picture, let’s talk.
