Top Challenges Prospective Buyers Face in the 2024 Housing Market

1. High Mortgage Rates

Higher mortgage rates translate into significantly larger monthly payments, making it difficult for buyers, particularly first-time buyers, to afford homes. With a larger portion of their income devoted to servicing mortgage debt, homeownership is less attainable for many.

2. Limited Housing Supply

The tight supply results in competitive bidding wars in many areas, which further drives up home prices. Make no mistake about it, the housing supply continues to be constrained, particularly in key metropolitan areas. Inventory levels remain historically low due to a lack of new construction, zoning regulations, and homeowners hesitant to sell and lose their existing low-interest mortgages.

3. Rising Home Prices

According to recent data, home prices in many desirable cities and suburban areas have continued to rise, albeit more slowly. However, higher prices are still outpacing wage growth, making it difficult for many buyers to save for down payments or qualify for larger loans. While the rate of home price growth has moderated compared to the boom years of 2020-2022, prices remain elevated in many markets.

4. Tight Lending Standards

Underwriting standards have become more stringent, with lenders scrutinizing income, employment history, and credit profiles closely. Lenders have tightened their standards due to economic uncertainties, inflation, and concerns about potential defaults. Borrowers are now required to have higher credit scores, larger down payments, and lower debt-to-income ratios to qualify for loans.

5. Affordability Crisis in Key Markets

Many middle-class families are being priced out of urban cores and forced to look in suburban or rural areas, where prices may be more reasonable but come with trade-offs such as longer commutes and fewer amenities. In major cities like New York, San Francisco, Los Angeles, and even second-tier cities like Austin and Denver, the cost of living and housing prices have skyrocketed. This has created an affordability crisis where home prices are well beyond the reach of the median household income.

The key for buyers is to remain flexible, patient, and financially prepared in a market that will likely remain competitive for the foreseeable future. The 2024 U.S. housing market presents significant challenges for prospective buyers due to high mortgage rates, limited supply, rising prices, and tighter lending standards. However, by improving financial health, exploring assistance programs, and considering alternative options like ARMs or more affordable locations, buyers can still find opportunities to purchase a home.

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Paul wants you to be in the know as it pertains to the financial challenges you face in 2024. Here is a list of the top financial challenges for you to understand.

Rising Cost of Living

The cost of essentials such as housing, healthcare, and education continues to climb faster than income growth. Inflation, particularly in the aftermath of the COVID-19 pandemic and global supply chain disruptions, has worsened this situation.

Stagnant Wage Growth

While the cost of living rises, wage growth has remained relatively flat, particularly for middle- and lower-income workers. This wage stagnation means many families struggle to make ends meet, leading to increased financial stress.

Consumer Debt Crisis

Credit card debt, student loans, and auto loans continue to be major financial challenges. As of 2023, the total consumer debt in the U.S. surpassed $17 trillion, with credit card debt reaching over $1 trillion.

Lack of Emergency Savings

A Federal Reserve survey found that nearly 40% of Americans would struggle to cover a $400 emergency expense. Without savings, consumers rely more heavily on credit cards, loans, or payday lenders to handle emergencies, leading to long-term financial difficulties.

Retirement Savings Shortfall

Many Americans are underprepared for retirement. A 2023 survey found that the median retirement savings for people in their 50s is only about $120,000, far below what’s needed for a comfortable retirement.

Rising Interest Rates

In response to inflation, the Federal Reserve has raised interest rates, leading to higher borrowing costs across the board. Mortgages, car loans, and credit card debt are all more expensive to manage as a result.

Healthcare Costs and Medical Debt

Healthcare costs continue to rise, making medical debt a significant issue for many Americans. According to the Consumer Financial Protection Bureau, medical debt accounts for more than half of all debt collections.

Financial Literacy Gap

Despite the complexities of today’s financial world, many Americans lack basic financial literacy. This makes it harder for consumers to navigate decisions related to saving, investing, and debt management.

Racial and Gender Wealth Gaps

Systemic inequality in wealth distribution continues to affect minority groups and women disproportionately. For instance, the median wealth of Black and Hispanic families is far lower than that of white families, and women generally have lower lifetime earnings and savings due to wage gaps.

Consumers in America are facing a multifaceted financial landscape, with systemic issues exacerbating personal financial challenges. The combination of rising costs, stagnant wages, overwhelming debt, and insufficient savings creates a volatile financial environment that makes it difficult for many to achieve long-term financial security. Addressing these issues requires not only policy changes but also improvements in financial education and access to tools that can empower consumers to better manage their financial futures.

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It is important to understand any time your data is compromised, the first thing to do is alert your financial services provider. Whether it’s for a credit card or a checking and savings account, you can freeze your accounts before any bad actors are able to access or drain them.

You should obtain a copy of your credit report from the three major credit bureaus (TransUnion, Equifax and Experian) to review for errors or possible fraudulent accounts and freeze your credit file.

You can also consider filing a police report so that you have the information on file if you should encounter problems in the future, it’s good to ask for a copy of that report as proof.

Informing the fraud unit at any one of the three consumer reporting companies also helps. The credit reporting company you call is required to contact the other two. Here are their phone numbers: Equifax: 1 (800) 525-6285, Trans Union: 1 (800) 680-7289, Experian: 1 (888) 397-3742.

A credit freeze is more effective than a fraud alert when it comes to preventing criminals from opening new accounts with your information. Beware if you get a letter from the IRS inquiring about a suspicious tax return that you did not file. You can’t e-file your tax return because of a duplicate Social Security number. …

You get an IRS notice that an online account has been created in your name. If a person receives a suspicious call or email that state there is a problem with their Social Security number or account, they should hang up or not respond to the email. 

People should then go online to oig.ssa.gov to report the scam to Social Security. For more information, go to www.ssa.gov/fraud. Protecting your identity and financial assets should always be a proactive part of your routine, whether that means daily, weekly or monthly monitoring.

Be proactive: Back up important files. Educate children about safe practices online and encourage safe social media guidelines. In order to be financially wealthy, one must be financially healthy.

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