Why Buying a Home Is So Much Costlier Today Despite Similar Mortgage Rates to 1997

Mortgage rates hovering around 7% may seem unusually high after years of lower rates, but historically they are not unprecedented. In late 1997, the average 30-year fixed mortgage rate was roughly 7.18%, which is very close to today's levels. However, buying a home feels significantly more expensive now because home prices have risen much faster than household incomes over the past few decades. While median home prices have more than tripled since 1997, median incomes have grown at a much slower pace, leaving modern buyers with larger monthly payments and down payments that consume a far greater portion of their budgets.