Today, Chairman Powell stated that inflation is still higher than the targeted 2%; therefore, the federal funds rate will remain at 5.25%-5.50. Hence, interest rates will remain “high” during the 2024 home-buying season, which historically has been April, May, and June.
Historical Interest Rates
I am a proponent of homeownership because homeownership (fixed rate mortgage) can protect against increasing housing burden (the percentage of income needed to pay for housing), be used as collateral for other ventures, and a mechanism to transfer wealth. Recently, when I encouraged renters to purchase a home, they questioned the advice because interest rates were “high.” Graph 1 shows that interest rates from late 2019 to early 2022 were lower than they had been for 30 years.
When I became a homeowner in 2000, my FHA mortgage rate was 7.5%, and my mortgage with real estate taxes was lower than market rent.
Graph 1. Mortgage Rates for Past 30 Years: 1974 to 2024
https://fred.stlouisfed.org/series/MORTGAGE30US#
Homeownership Trends by Race
A recent National Association of Realtors study examines homeownership rates and homeownership affordability. Between 2012 and 2022, the largest increase in homeownership was observed among Asians – with 6.1% more homeowners, which amounts to 1.5 million more homeowners. Hispanics followed with a 5.4% increase, which amounts to 3.2 million more homeowners. Whites experienced a 3.1% increase – with 65,000 more homeowners, while Blacks observed a 1.6% increase – with 950,000 more homeowners. These statistics are for the overall racial and ethnic groups and do not provide information on homeownership by sex.
Graph 2. Homeownership Trends by Race in the Last Decade
Homeownership Trends by Race
In honor of Mother’s Day, Table 1 provides the change in homeownership for mothers by race, ethnicity, and marital status. The decrease in the number of separated or widowed mothers who were homeowners is driven by the decline in White and Black mothers in these categories who were homeowners. These findings are disturbing as they suggest these mothers have become more economically vulnerable over the years, which may have negative consequences for their children. The increase in the number of mothers who are homeowners was driven by the rise in the number of multiracial mothers who became homeowners.
Table 1. Mothers’ Homeownership by Race and Marital Status
Source: 2022 American Community Survey
There was an increase in the number of Hispanic mothers who were homeowners for all marital groups except separated, suggesting that mothers who become separated from a spouse are more economically vulnerable.
Table 2. Hispanic Mothers’ Homeownership by Marital Status
Source: 2022 American Community Survey
In a future report, we will explore the economic changes families experience after the death of or separation from a spouse.
Next week, my parents and I will travel to Alaska. So, to all the mothers and mother figures in our community,
