With Autumn here, and the holidays right around the corner, the real estate market is facing real affordability challenges from high prices, low inventory, and persistent elevated mortgage rates.

A recent national survey found these elements are especially chilling for those who are either in or are approaching their prime homebuying years. Nearly 20% of millennials (ages 29 to 44) and more than 10% of adult members of Generation Z (18 to 28), believe they will NEVER own a home.

Sellers are nervous, too. Putting their homes on the market today means giving up existing lower mortgage rates in exchange for higher ones. This reluctance further exacerbates the inventory shortage, which has reached crisis levels.

New listings in August were down nearly 9%, continuing an amazing streak of 60 weeks of year-over-year declines. Total housing inventory lags last year's levels by nearly 6%.

These constraints are pushing home prices higher at a time when buyers are hoping for relief. The median list price in August was a hefty $435,000. While analysts increasingly feel mortgage rates are at a ceiling – and may even cool - the ongoing tension between supply and demand keeps asking prices stubbornly high.

Unfortunately, those waiting for a flood of new homes for sale may be disappointed. Fresh listings remain more than 20% below historic levels.

Home-buying activity typically slows in the fall and winter because families with children don’t want to move during the school year. Cold weather and the holiday season also deter home shoppers.

Despite these challenges, many aspiring homeowners find success through down payment assistance (DPA) programs. A myth has persisted for decades about needing at least 20% of a home’s purchase price to successfully obtain a mortgage, and a surprising number of Americans still believe it.

National surveys show 35% of consumers think a down payment of 16% to 20% is required while 10% say more than 20%. The National Association of Realtors (NAR reports the average down payment for first-time 2022 homebuyers was 6% to 7%.

Some DPAs require even less. The Federal Home Administration (FHA) loan has rates as low as 3.5%. Veterans and active-duty military may be eligible for VHA loans with zero down. There are many private and public assistance DPAs specific to regions, states, and municipalities.

Ask a Bay Equity Home Loan professional about Interest Rate Buydowns - an increasingly popular option to bring down interest rates and mortgage payments for struggling buyers.

Bay Equity is committed to guiding you through loan programs in your area to help make an informed choice suited to your unique needs. Starting on homeownership sooner rather than later is the path to long-term savings and wealth accumulation. Rent payments, in contrast, only benefit your landlord.

Make an appointment to talk with a Bay Equity Loan Officer today. We’re here to get you home.