THE RISING COST OF EVERYTHING: High Mortgage Rates Keep First-Time Buyers Out of the Housing Market

By Ellen Fike

Special to the Wyoming Truth

CHEYENNE, Wyo. – Zak Newbury-VanLove can remember earlier this year when he and his husband, Trenton Newbury-VanLove, began to entertain the idea of buying a house.

It seemed like an obvious next move for the young married couple. They both work, Trenton, 30, with two jobs in the education field and Zak, 28, with one as a hairstylist and nail technician. Both are also in school. Zak is pursuing an associate’s degree in biology and Trenton is working on a master’s degree in forensic psychology and sociology.

But they were shocked at the prices in Cheyenne, an average of $350,000 for a two-bedroom, two-bathroom single-level, 1,500 square-foot house, after looking through home listings on Zillow and other websites. The couple ran the numbers, and with a 10% down payment and a mortgage rate of 5%, the lowest monthly mortgage payment they could find was around $2,000.

“That’s $800 more than what we’re paying now,” Zak Newbury-VanLove said. “And we can do that, but even that’s still expensive for a rental.”

But the steadily increasing housing prices in Wyoming, coupled with the hike on home loan rates, have kept the Newbury-VanLoves from purchasing their dream home. Newbury-VanLove feels disheartened and does not think they will be able to buy a house within the next five years.

“There are times we’ve struggled to afford our rent, let alone a mortgage payment that’s probably double what our rent is,” Newbury-VanLove said. “We’ve looked in Cheyenne. We’ve looked in Fort Collins [Colorado] and it’s the same no matter where we go.”

In the past week, the average rate on a 30-year fixed loan hit 7%–a 20-year high. At the beginning of the year, rates hovered around 3%.

This, in addition with the high prices of goods and services, has kept younger buyers in Wyoming from settling down into a home of their own, according to Cheyenne realtor Adrianna True.

“I think rising interest rates are making folks very nervous,” True said. “They see rates in the 5% to 7% range and freak out. Frankly, it’s a pretty normal market. First-time home buyers are still pretty low, in the high 5s or low 6s. Statistically, that’s a pretty good rate over the years.”

“The pandemic gave us this new expectation of ‘normal,’ and I don’t think that’s what our normal is supposed to look like,” True continued. “Buying a home is an investment, but I think many people aren’t really looking at it as such. They see it as another bill. A mortgage at 6% interest is still a much smaller number than rent at 100% interest. You have to see the long-term goal. If you’re paying 10-plus percent on a car, 27-plus percent on credit cards, and you take that as a perspective, 6% on a house really isn’t that bad.”

The Newbury-VanLoves are not alone in their hesitancy to buy a house during this time.  The National Association of Realtors recently reported that existing homes are selling at the slowest pace since September 2012, due to rising mortgage rates.

There seems to be no end in sight for price hikes, meaning that potential home buyers have to find alternative housing, whether by renting or living with friends or family. The Newbury-VanLoves are doing the former, but Zak pointed out that even their rent has increased, albeit just $50, in the last year. The couple live in a relatively small one-bedroom apartment, measuring less than 1,000 square feet.

“If you think about the monetary factor of renting vs. a mortgage, with a mortgage, you’re paying for something that’s yours,” Newbury-VanLove said. “Rent has the ‘benefit’ of maintenance needs, but we’re still not paying for something that’s truly ours. This is discouraging, because we want to have something to call our own.”

Newbury-VanLove said there would be “no way” he and his husband could afford a mortgage payment with the current prices and mortgage rates, even if their parents co-signed on their loan and despite the fact they work three jobs between the two of them.

The Newbury-VanLoves are hoping that once Trenton obtains his master’s degree, he will be able to secure a higher-paying position as a therapist while Zak continues to work his way through his associate’s program and then go on to earn his bachelor’s degree.

But even if Trenton were to get a better-paying job as a therapist, Newbury-VanLove is unsure whether they will be able to afford a mortgage payment.

“That’s still a few years away and at that point, the housing market is probably going to be even more ridiculous,” Newbury-VanLove said. “It sort of feels like you take two steps forward, then you take three or four steps back. We feel like we’re almost there, and then prices skyrocket again.”

In the meantime, the couple are trying to budget their money more responsibly, cutting out restaurant dining or buying non-essential items for their home or each other.

“I’ve been paying rent basically my whole life, so this is nothing new for me,” Newbury-VanLove said. “But we’d love to be able to find something to make our own, even if it’s not very big and we’re a little squished. Because we’re a little squished right now, but we make it work.”