By Rukmini Callimachi, New York Times Service 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: , a crippling shortage of inventory, and to a median of $434,000, the highest on record, according to . People who bought their starter home a few years ago are finding themselves frozen in place by what is known as the “ ” — 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. A year ago, Chris and Alison Wentland were eager to sell their town house 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 3D video that panned from room to room.
The couple’s children — then ages 2 and 6 — shared a room barely big enough to fit a crib and a twin-size bed. A year later, the children share a bunk bed and the couple haven’t even listed the house, much less bought a new one. It’s not that they can’t find buyers; they just can’t afford to se.