top of page
  • Writer's pictureRoland Abbott & DeZoort

Four Shocking Facts About The Housing Market

If you’ve been a homeowner for the past three years, your home has appreciated by a truly historic margin. Median home values are up by a staggering $116K despite interest rates more than doubling. For most Americans, the past three years have added more to their personal net worth than any previous point in their lives.

While the post-COVID housing boom has been a welcome sight to homeowners, the effects on young Americans looking to buy a starter home have been devastating. Countless Americans have been priced out of the housing market while being forced to pay a growing portion of their income to rent.

Here are four shocking housing facts you may not know:

Old homes cost as much as new homes. According to Axios, if you’re thinking about buying an existing home in order to save some money, you’re out of luck. The median price of a new and existing home reached parity last month for the first time ever. As rates continue to skyrocket, existing homeowners are less inclined to sell their current house with a 3% interest rate and purchase a new house with a 7% interest rate. This has resulted in sky-high prices for existing homes that don’t appear to be coming down anytime soon.

The median American home costs $3K per month if purchased today. Three years ago, the 30-year mortgage rate was 2.98% and the median home price was $294K. Thanks to the housing boom and soaring interest rates, the current 30-year mortgage rate is 7.09% and the median home costs $410K. This means that not only are houses more expensive, but financing them is more expensive than it has been in over 21 years. Market Watch reports this roughly equals a $3K monthly mortgage payment after taxes and insurance are applied. The story goes on to report that in order to afford the average home, an individual must make a minimum of $117K per year. Yikes!

New homes are smaller than ever. The Wall Street Journal reports that homebuilders are "axing dining areas, bathtubs, and separate living rooms" in order to make homes more affordable. The average home built today is already 10% smaller than the average home built in 2018 as this percentage is expected to grow in the near future.

This is just the beginning of the housing crisis. If you’re a fan of CNBC’s Shark Tank, you’ll recognize the longtime star Barbara Corcoran. Corcoran was a successful real estate mogul before making the jump to reality television. In a recent interview with Fox Business, Corcoran said that “housing prices are going to go through the roof.” She explained it by pointing out that the bottleneck in the housing market is sky-high interest rates which keep buyers and sellers locked in place. Once interest rates come down, buyers will hit the market with a frenzy which could lead to a “COVID market all over again.”

As an insurance agency, it’s important that our customers understand the dynamics of the housing market to ensure they are properly protected. If you’re a homeowner and you haven’t adjusted your insurance coverages to reflect an increased net worth from the housing boom, it’s time you did so. This may mean adjusting your homeowner's insurance to ensure replacement coverages now reflect the new value of your home. If your home is not bundled with your vehicle, you are likely leaving money on the table. Our team can shop your home and auto needs with dozens of companies to find you the right coverage at the right price.

Just because the housing market is crazy, doesn't mean you have to worry. Our team of insurance experts has worked with thousands of homeowners and ensured they have the right coverage at the right price. Give us a call today and experience the difference at Roland, Abbott, & DeZoort Insurance.


bottom of page