By Ronda Kaysen | The New York Times
At a rooftop party, the conversation turned to the default of the upwardly mobile: real estate.
Almost anyone shopping for a home in the 2020s knows the script by now: Someone mentions their recent home purchase, a tale undoubtedly rich with drama, stress and suspense. Guests, well schooled in the volatility of the housing market, lean in for the follow-up: When did you buy?
The response to that key question “is normally followed by an ‘Oooh,’” said Evan Barker, 36, a lawyer who has participated in enough of these exchanges to know that the “Oooh” means one of two things: You either got the interest rate of a lifetime, or you squarely did not.
Fortunately for Mr. Barker, he falls into the former category. He and his wife, Laura Gallagher, 36, bought their first house in the early spring of 2020, weeks before home prices began their fastest ascent in U.S. history, as mortgage rates plummeted to historic lows. In January 2021, the 30-year mortgage rate bottomed out at 2.65 percent, a few months before Mr. Barker and Ms. Gallagher refinanced, besting the national average with a rate of 2.375 percent.
So it’s no wonder that Mr. Barker spent the evening enjoying the banter. He knew his lines for this dialogue. He had spent months fine-tuning his delivery, usually waiting for someone else to toss out an enviable interest rate before he topped it.
“I throw the humble brag in,” he said. “Hey! Best financial decision of my life was pure luck. It’s just that simple.”
American homeowners now stand on two sides of a divide. On one side are those who had the good fortune to buy or refinance between 2020 and early 2022, and now enjoy notably low monthly interest payments on their principal. On the other side: everyone else.
These prospective and recent home buyers are watching their purchasing power diminish as home prices hold steady amid rising rates. In mid July, the 30-year mortgage rate hovered just under 7 percent, after reaching a high of 7.08 percent in October. The last time rates exceeded 7 percent was in 2002 — more than 20 years ago.
The contrast creates ideal conditions for ribbing from the winners and resentment from the losers. Homeowners and buyers say the sparring has been happening among friends at parties, with colleagues at the office, and on social media, where it plays out as memes that are smug, shocked or hopeless, depending on where you fall on the spectrum.
Consumers have little control over what mortgage rate they get, aside from maintaining a solid credit rating. Mortgage rates have been rising in response to the Federal Reserve’s continued efforts to wrestle inflation under control. So timing, not skill, dictates the rate — and timing is a byproduct of luck.
As it happens, luck isn’t entirely random. The pandemic exacerbated inequalities that existed before 2020. For many wealthier Americans, the pandemic was a financial boon. They kept their jobs, were able to work remotely, enjoyed bonuses and raises, and had cash on hand when interest rates plummeted to keep the economy afloat. They were the ones best positioned to pluck up homes, driving up prices. The people who spent 2020 and 2021 struggling through job losses, illnesses or other financial hardships likely missed out on the moment, and are now the ones enduring the hard consequences of rampant inflation.
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