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NYTimes
New York Times
2 Jun 2024
Rukmini Callimachi


NextImg:Stuck in a Starter Home

If buying a home is an inexorable part of the American dream, so is the next step: eventually selling that home and using the equity to trade up to something bigger.

But over the past two years, this upward mobility has stalled as buyers and sellers have been pummeled by three colliding forces: the highest borrowing rates in nearly two decades, a crippling shortage of inventory, and a surge in home prices to a median of $434,000, the highest on record, according to Redfin.

People who bought their starter home a few years ago are finding themselves frozen in place by what is known as the “rate-lock effect” — they bought when interest rates were historically low, and trading up would mean a doubling or tripling of their monthly interest payments.

They are locked in, and as a result, families hoping to buy their first homes are locked out.

“Home affordability is the worst I’ve ever seen it,” said Daryl Fairweather, Redfin’s chief economist.

ImageA man sits on the floor playing with a toddler. In the background, a woman in a green dress sits on the floor. At right, a girl wearing a pink dress and a blue cape stands near a bookshelf.
A year ago, the Wentlands planned to sell their home and trade up. But after realizing that their mortgage rate would triple, they decided to stay put.Credit...Michelle Litvin for The New York Times

A year ago, Chris and Alison Wentland were eager to sell their townhouse in the coveted Lincoln Park neighborhood of Chicago, so they hired a real estate agent who sent a photographer to take slick photos of the house, including a 3-D video that panned from room to room.


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