WASHINGTON (TND) — Mortgage rates remain on the rise, crushing demand for housing.
The benchmark 30-year fixed-rate mortgage loan has climbed to 7.1% — that's the highest rate since 2001 — which has caused for demand for loans to plummet. Last week, it fell to about half of what it was at this time last year to the lowest level since 1997. Experts say despite this dip in demand, the supply of homes for sale isn't increasing.
These increasingly high mortgage rates and home prices have left many opting to rent; but amid inflation and record-high rental prices, others are making the tough decision to ditch living on their own altogether.
“I found myself just realizing it was smarter to just move home with my parents and save some money,” recent college graduate Katelyn Crecca said.
This time of year is usually the busiest time to rent an apartment, but after a stretch of record-high rental prices, there are more vacancies as people search for other options. More and more people are moving back in with mom and dad to avoid paying high rent.
“It's very competitive and apartments are in very high demand,” said Brian Carberry, managing editor for Rent.com.
That was back in February. Now, realtors are noticing something else.
“There’s a shortage of renters because of inflation and the cost of leasing,” realtor Neil Hardon said.
Rental technology platform RealPage says it’s the first time they’ve recorded a third-quarter drop in demand in the 30 years they’ve been tracking apartments.
The Wall Street Journal reported Tuesday that a recent UBS survey found the number of people living with family or friends without paying rent over the last year is well above the pre-COVID average.
“I’m probably going to try and live at home as long as I can and just save up as much as I can before I even start to look for an apartment or a house,” Crecca said.
Experts say that prices are declining partly because demand for apartments is falling.
“To address the affordability issue — rent affordability — we need to address the supply side, build more apartments,” said Lawrence Yun, chief economist for the National Association of Realtors.
Realtor.com reports median rent in the 50 largest cities dropped to a little more than $1,700 in September. However, it’s still more than what we’ve seen in years past, leaving many struggling to make ends meet.