COVID first rocked the world back in 2020, but the housing market continues to feel the effects. U.S. home prices are near record highs, and mortgage rates have rocketed to their loftiest levels since 2000.

With homes in short supply, longtime homeowners are in a strong position: Most of them are sitting on big gains in value. Millions locked in record-low mortgage rates in 2020 and 2021. But for today’s would-be homebuyers, times are decidedly tough. They face limited choices and an affordability squeeze.

Bankrate surveyed U.S. adults to get a handle on how Americans are feeling about the housing market. The mood is not sunny. Nearly half of Americans say it’s a bad time to buy a home, and about a third say they’ll never be able to afford their dream home.

Some of the pessimism is warranted, some isn’t. Here’s a rundown of how Americans view the housing market — and their place in it.

Now is a bad time to buy a home

  • 49 percent of U.S. adults agree with this statement.
  • Those in the West and Midwest (51 percent each) are more likely to agree than folks living in the Northeast (44 percent).
  • Baby Boomers (54 percent) and Gen X (52 percent) are more likely to agree than their Millennial (44 percent) and Gen Z (41 percent) counterparts.
  • Somewhat counterintuitively, those making under $50,000 annually are less likely to agree (43 percent) than those who earn more than that.

Verdict: Fiction

Let’s break this one down. By their actions, buyers agree that now is the wrong time to buy: Home sales have plummeted over the past two years amid high prices and rising mortgage rates. Even so, demand still outpaces supply, and that means home prices are still high.

“We’re in this fascinating position of tremendous demand and too little inventory,” says Dave Liniger, co-founder and chairman of the board of real estate brokerage RE/MAX.

The lack of supply is being driven by a couple of factors. One is that homeowners whose mortgages are locked in at 3 percent aren’t eager to give up their super-cheap loans for rates near 8 percent. Another is that builders simply aren’t constructing enough homes to meet demand.

All of that means that home prices are unlikely to fall in the foreseeable future. And because high mortgage rates have pushed so many buyers to the sidelines, it’s possible that, if and when rates do fall, buyers will rush in, triggering another frenzy. “When interest rates do start to come down, it’ll be another boom-and-bust cycle,” Liniger says.

In other words, while this seems like an unfavorable time to shop for a home, it’s not clear that conditions will be any better in the foreseeable future. Or, as Liniger puts it, “The market we’ve got is the market we’ve got.”

I’ll never be able to afford to buy my dream home

  • 32 percent of U.S. adults agree with this one.
  • Women (34 percent) are more likely to agree than men (29 percent).
  • Boomers (26 percent) are less likely to agree than those who are younger.
  • Understandably, those with an annual income of less than $50,000 are more likely to agree (40 percent) than those making between $50,000 and $79,999 (28 percent), $80,000 and $99,999 (29 percent) and $100,000 or more (21 percent).

Verdict: It depends

Definitions of “dream home” vary widely, as do individual financial situations, so we can’t make a clear ruling on this one. However, the housing boom caused Americans to rethink their housing priorities. Many are choosing not to move and instead to stay in their homes and renovate — often putting their equity to work by using funds from a home equity loan or home equity line of credit (HELOC).

Those who did choose to move have embarked on a quest for more affordable housing, leading to outflows of people from pricey states like California and New York, and inflows into Florida, Texas and Nevada.

Mortgage rates will remain elevated for the foreseeable future

  • 49 percent of Americans agree with this statement.
  • Those in the Midwest (54 percent) and South (51 percent) are more likely to agree than those in the West (47 percent) and Northeast (44 percent).
  • A third of Gen Z (33 percent) and 40 percent of Millennials agree, compared to 53 percent of Gen X and 62 percent of Boomers.
  • Those making less than $50,000 annually are less likely to agree (42 percent) than those making between $50,000 and $79,999 (56 percent), $80,000 and $99,999 (61 percent) and $100,000 or more (60 percent).

Verdict: Fact

Mortgage rates are nearly impossible to predict. But with that caveat, housing economists agree that they won’t return to the sub-3 percent levels of late 2020 and early 2021. In some ways, that’s good news — rates fell that far only because of a deep recession and wide-ranging lockdowns. And they’ve risen so far so fast because the economy has recovered far more quickly than anyone expected.

Now, mortgage rates are flirting with 8 percent, or even beyond, and it seems unlikely that they’ll return to the sub-5 percent levels that Americans began to take for granted in the years after the Great Recession.

Lisa Sturtevant, chief economist at Bright MLS, a major listing service in the mid-Atlantic region, agrees. “Average mortgage rates are now nearly three times higher than the historically low levels hit back in 2021,” she says. “And there is more and more data coming out to suggest that we should expect that rates will stay higher for longer.”

A buyer needs a 20 percent down payment to buy a home

  • 32 percent of Americans agree that 20 percent is the minimum.
  • Those in the West and Northeast (both 34 percent) were slightly more likely to agree than Midwesterners (30 percent) and Southerners (31 percent).
  • Gen Z (24 percent) is less likely to agree than Millennials (32 percent), Gen X (33 percent) and Baby Boomers (35 percent).

Verdict: Fiction

Yes, a 20 percent down payment is ideal. It helps borrowers qualify for the best rates and the lowest fees, and it eliminates the need to pay for private mortgage insurance. But with the typical U.S. home price close to $400,000, according to the National Association of Realtors, a 20 percent down payment works out to around $80,000 — a sum most Americans don’t have on hand.

However, paying that amount upfront is certainly not a necessity: 20 percent is a guideline, not a requirement. For qualified buyers, Federal Housing Administration (FHA) loans can require just 3.5 percent down, while VA loans for qualified military members and veterans require nothing down. Even conventional loans are available for some with just 3 percent down.

If you’re a first-time homebuyer, there are also a number of down payment assistance programs that help cover your costs in the form of grants and low-interest or forgivable loans.

Renting is cheaper than owning a home

  • Just 17 percent of U.S. adults agree with this statement, by far the lowest rate of the survey.
  • Gen Z (24 percent) and Millennials (21 percent) are much more likely to agree than Gen X (14 percent) and boomers (13 percent).

Verdict: Fact (with some caveats)

Rents soared to record levels during the pandemic, and renters have been caught in a tough spot ever since. Many of them would love to buy, but sky-high home prices are holding them back.

Buying a home with a fixed-rate mortgage means you know how much your monthly principal and interest payments will be for years to come. Over the long run, homeowners generate real benefits from this certainty — if you keep your loan for 10 or 15 years or more, your pay is likely to rise over that time, but your mortgage payment is locked in place. At that point, the monthly payment that once looked daunting can seem quite manageable.

Now for the caveats: Homeownership comes with many costs that aren’t obvious when you’re renting. You’re responsible for property taxes, for example. You also have to pay for homeowners insurance — it’s affordable in many parts of the country, but in high-hazard states like Florida and California, insurance premiums have been soaring. You’re also responsible for maintenance and repairs, which run the gamut from mowing the lawn to high-ticket items like replacing the roof or repairing the air conditioning.

Overall, though, even though homeownership is expensive, it’s an important way to build wealth and to create certainty around your living situation and monthly expenses.

A buyer needs excellent credit to get a mortgage

  • 39 percent of U.S. adults agree with this statement.
  • Those in the West (41 percent) and South (40 percent) are more likely to agree than Midwesterners (35 percent) and Northeasterners (36 percent).
  • Boomers are more likely to agree (44 percent) than Gen X (38 percent), Millennials (36 percent) and Gen Z (34 percent).

Verdict: Fiction

It’s true that your credit score is the most important factor determining your mortgage rate and what type of loan you qualify for. The best deals go to borrowers with credit scores of 740 or higher. But that doesn’t mean borrowers with less-than-stellar credit are shut out. Far from it, in fact.

Borrowers with credit scores in the 700 to 740 range (a step below excellent) still have plenty of choices. And if your credit score is in the 600s, don’t despair — most loans are readily available to borrowers in that range, too, though your interest rate will be higher. And if your credit score is below 600, look into FHA loans: They can go as low as 500, with a 10 percent down payment, or 580 with a 3.5 percent down payment.

  • Bankrate commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,390 U.S. adults. Fieldwork was undertaken on September 27–29, 2023. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.