What do you get after mortgage rates more than double after a pandemic-fueled buying boom sent home prices soaring? A housing affordability crisis. This year, affordability was worse than during the housing bubble’s peak in 2006, and by some estimates was the least affordable housing market since the 1980s, a decade marked by high inflation and even higher interest rates that peaked at 18%. The result is a year of frustration and hopelessness for buyers and renters.
Fortune revisited would-be buyers and current renters that we spoke to earlier in the year to see how they’ve fared since in the difficult housing market. Their struggles track the challenges many people are facing in achieving the American dream.
Lately, the housing market has been largely frozen following the Federal Reserve’s interest rate hikes to lower inflation, as many homeowners hold on to their homes for fear of losing their below-market mortgage rates. That has only further constrained supply amid a shortage of homes.
Still, there are some glimmers of hope. Mortgage rates have fallen in recent weeks from their peak, slightly reducing the monthly payments to buy a house. Meanwhile, the rental market has softened and may continue to do so.
Stan Oklobdzija, early forties: Thought the idea of ever owning a home in Los Angeles was ‘funny’
Stan Oklobdzija, who’s in his early forties, and his partner, who’s in her mid-thirties, both have good-paying jobs; he’s a college professor and she works in the digital advertising industry. Together they made over $200,000 annually. And yet the thought of owning a home in Los Angeles was an impossibility to him. “With housing costs being what they are, just the idea of us ever owning a home is absolutely—like it’s funny. It’s like we might as well own a spaceship,” he said.
At the time of our interview in April, they lived in a one-bedroom condo in the Little Tokyo neighborhood, and he knew they were lucky to be having this conversation at all, given the two of them were in a better position than most. He wondered what it’s like for other Los Angeles residents who earn close to the city’s median household income of $69,778.
Still, despite their incomes, Oklobdzija said they’d never have enough money saved for a typical down payment on a home in the city. As a public policy professor and a former research director for a housing advocacy nonprofit, he blames his inability to buy a home on the structural barriers to building housing—downzonings across Los Angeles (in other words, the rezoning of land for lower density housing that is typically more expensive) and NIMBY-ism (or antidevelopment sentiment) throughout California. “We are choosing to have a housing crisis,” Oklobdzija said.
This summer he moved to New Orleans for a professorship at Tulane, a move that he said Los Angeles’ difficult housing market partly prompted. He recently told Fortune that he and his partner are renting a two-bedroom apartment in Uptown, a neighborhood in New Orleans, for around $1,900 a month, far cheaper than what an equivalent rental would cost in Los Angeles. But they haven’t given up on buying a home and are looking for one.
Anastasia Selby, early forties: Had to move states to afford rent, let alone a house
Anastasia Selby, a nonbinary writer in their early forties, moved in 2022 to Tallahassee after realizing they could no longer afford to live in their hometown of Seattle. “It’s so strange to feel like a city is off-limits, like a city that is part of me,” Selby said.
Selby worked as a nanny while in Seattle and was at one point close to being considered “rent burdened,” which is what the Department of Housing and Urban Development has defined as spending more than 30% of income on housing. It was during an extremely cold winter, when Selby was living in a one-bedroom apartment without a fully functioning heater, that they decided to apply to Ph.D. programs somewhere more affordable. “I can’t stay in Seattle, like I can’t afford to live here,” Selby remembers thinking.
“I didn’t want to leave…and it really felt like I was leaving home,” Selby said. “It felt like this is the last time I may try living here because I can’t afford it, and I don’t think I’ll ever be able to afford it.”
Now, living in Tallahassee, Selby’s rent is much lower. To compare, that city’s median rent is 30% below the national level, whereas Seattle’s is 5% higher. Selby’s rent for a “very very small” house is $750 a month. That’s significantly cheaper than the roughly $1,300 a month they were paying in Seattle. Selby said their life has been much better financially since, and they even have a small garden.
Emily Blake, mid-forties: She and her husband can’t leave their rent-controlled apartment
Emily Blake, who’s in her mid-forties, and her husband both work in the film industry, making just over $100,000 last year combined. They’re living paycheck to paycheck, unable to move out of their rent-controlled apartment in Los Angeles—and they can’t imagine ever owning a home in the city.
Before the pandemic-fueled housing boom pushed home prices up substantially, they thought about one day buying a house. But with today’s high prices, they can’t move out of their rent-controlled apartment because they know it’s unlikely they’ll find another home with a rent remotely close to theirs, let alone consider buying a home. So they’re at a crossroads.
“Unless we change careers and move out of L.A., I don’t see how we’ll ever afford a house. The prices just keep going up,” Blake said. She feels as if you have to be rich to afford a home in Los Angeles, and if you’re not, it’s impossible. “It’s just all very hard all the time,” she said.
Blake recently told Fortune that nothing has changed; they’re still living in their rent-controlled apartment. And despite the end of the six-month-long writers’ and actors’ strikes that stalled production and their paychecks earlier this year, there’s been little work for them in the film industry.
Jacob Fuerst, 40: Renting a home half the size and twice as much as his last house
Jacob Fuerst and his wife, Marti, left North Carolina in 2022 for a job in New Hampshire. Only they didn’t realize how difficult it would be to find a home. After all, they’d bought and sold three different homes during their lives together. Fuerst, 40-year-old engineer, and Marti, a technical writer, earn around $200,000 a year combined. They’ve always been able to find an affordable house on a reasonable timeline, using the sale proceeds from the previous home to buy the next. But this isn’t your typical housing market; rather it’s one characterized by historical unaffordability. “I’ve worked my entire life, I’m not asking for the moon,” Fuerst said. “I should be able to afford a house that is big enough for my family.”
At one point, Fuerst and his wife offered nearly $700,000 for a place before pulling out when they discovered the roof would require an additional $70,000 in repairs. They tried to negotiate a lower price with the seller, but were told that somebody else would buy it in this condition, if they didn’t, so they didn’t get the house.
He, his wife, two kids, and their dogs aren’t much better off than first-time homebuyers, and that’s left them renting a home half the size of their previous house and that costs twice as much. They’re still hoping to buy a house, but they’re not optimistic given how hard it is to save enough for a down payment after accounting for rent, utilities, and childcare.
“We did all of the things that we were told to do that would make us successful…and I’m looking at my life. I’m a transient without a home and no equity, how does that happen?” he said. “It just feels unfair that I held up my end of the bargain, I did the things, and that American dream just kind of got yanked out from in front of me.” Fuerst now tells Fortune that little has changed for him, though he’s keeping an eye on interest rates, which are expected to be cut next year. “I’ll believe it when I see it, so we’re staying put for now,” he said.
