Steve Rattner’s Morning Joe Charts: Buyers Face a Brutal Housing Market

On MSNBC’s Morning Joe today, Steve Rattner charted just how tough the housing market has gotten for would-be buyers.

Recent data from the National Association of Realtors shows that the nation is facing a new housing crisis: the decreasing ability for first-time aspiring buyers — particularly Americans of color — to purchase a home. And even Americans seeking to trade up face a tough combination of high prices and high financing costs, both of which pose a significant threat to the American dream of home ownership.

Between July 2021 and June 2022, the percentage of homes bought by first-time purchasers fell to 26%, down from 34% in the twelve months prior. That represents a sharp escalation of a downward trend that has continued over the last decade as housing prices have climbed from their post-bubble slump. (The first-time buyer shares in 2009 and 2010 are particularly high because of the First-Time Home Buyer Credit, part of the 2008 Housing and Economic Recovery Act.) As a result, the median age of buyers rose to 53 this year, up from 45 in 2021 and 31 in 1981.

Equally concerning, 88% of homes were bought this year by white Americans, up from 82% in 2021 and the highest since 1997. Putting this in perspective, only 62% of the American population is white.

Not surprisingly, this trend was driven in large part by large increases in both home prices and mortgage rates. The median sale price of existing homes rose to $385,000 in September 2022, from $356,000 just a year earlier. In 2012, at the post-GFC nadir of home prices, the average home sold for just $228,000 (adjusted for inflation).

Meanwhile, after declining steadily for two decades, mortgage rates began rising steadily earlier this year, reaching 7.2% in October before declining to 6.6% this week.

Putting home prices and mortgage rates together yields a tough picture for would-be purchasers. In October 2020, the buyer of a median home offered for sale would have faced monthly mortgage costs of $1,200 (assuming a 20% down payment). Two years later, that monthly payment would have risen to $2,200. Putting it another way, the monthly payment in October 2020 would have amounted to roughly 25% of the median American household’s after-tax income. In October 2022, it would have consumed 47% of that family’s income.