High interest rates make hunt for a new home even more challenging

(NEW YORK) — Rising inflation has driven mortgage rates up, making it difficult for many Americans to find an affordable home. As a result, many potential buyers find themselves waiting for an interest rate cut to bring mortgage prices down.

For more than a year, LaToya Trotter has worked closely with trusted real estate agent Shannon Welch to find an ideal new home in the vibrant Chicago area. Trotter purchased their current home in 2020 for $45,000 in an all-cash offer.

Interest rates have dropped from their 23-year high in 2023 but are nowhere near the 3% homeowners enjoyed in 2020. This puts home prices at an all-time high, dramatically increasing moving costs.

According to the National Association of Realtors, the current monthly payment for a median-priced home has more than doubled since 2019. Buying a starter home in more than 200 U.S. cities now costs $1 million.

“It’s sad because there are people in America that will never make $1 million in their lifetime,” Welch said. “So how can they afford a million-dollar home?

Trotter, a single mother and electrical engineer, is searching for a new home priced at $400,000 to secure her 14-year-old daughter Adoniah’s future. She wants to move closer to her daughter’s school. The teenager attends a private Catholic high school located 30 minutes away from their South Chicago home.

She visited a three-bedroom, two-bath home listed for $340,000 and a five-bedroom, three-bath home with an asking price of more than $459,000.

Welch is keeping a keen eye on the market for her client. She doesn’t dismiss Democratic presidential nominee Vice President Kamala Harris’ promise to build 3 million new housing units if elected, but she thinks that plan misses the mark in Chicago.

“We have tons of inventory throughout Chicago land,” Welch said. “We have hundreds of properties on auction. We have properties that are abandoned.”

Harris proposed a plan to assist first-generation homebuyers by providing a down payment of up to $25,000.

While Harris’ Republican rival Donald Trump has yet to outline a housing plan if he wins back the White House in November, the Republican National Party this year pledged to promote homeownership through tax incentives.

According to a recent ABC News/Washington Post/Ipsos poll, more respondents trust Trump over Harris to handle the economy and inflation by 9 points. Over 85% of adults consider this a top issue in their presidential vote.

When asked who she’ll vote for this November, Trotter noted that she’ll back the candidate whose policies seem likely to offer her the best future.

“I’ll just again look to find whoever has policies that align more closely with what I’m looking to do today,” Trotter said. “It’s not about the past. It’s about looking forward.”