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January 2024 » thefivestar.com 71 January 2024 J O U R N A L gory. This is the second set of awards for this category, which provides funding for property owners to include climate re- silience and energy and water efficiency improvements as part of a development or rehabilitation transaction that was already underway. Funding amounts ranged from $231,623 for the St. Croix Apartments in Calis, Maine, to $20 million for the Jack Satter House Hebrew SeniorLife in Revere, Massachusetts, and the Heather- brook Project in Port Arthur, Texas. "As we look back on the climate- and weather-related disasters of the past few years, we see vividly how vital this funding is to ensure the long-term safety and viability of households and commu- nities," Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon said. "Awards through the GRRP program illustrate the immediate and concrete steps that the Biden-Harris administration is taking to protect the nation's low-income residents and the environment." FED ATTEMPTS TO MODERATE HOUSING FRENZY T he Federal Reserve's plan to tame the housing frenzy with higher interest rates has a major blind spot: More than 40% of all U.S. mortgag- es—most of which are fixed-rate—were obtained in 2020 or 2021, when rates were at rock bottom. According to Creditnews research, about one-quarter (23.4%) of mortgages originated in 2021 when the 30-year mortgage rate fell below 3%. Another 17.8% originated in 2020—the year the Fed slashed interest rates to zero. Nearly two-thirds (64.5%) of U.S. mortgages have rates below 4%, roughly half the current 30-year fixed rate. Assuming a 10% down payment, the difference between financing an average home with a 30-year mortgage at 7.79% (mortgage rate peak as of October 26) and 3.6% (effective mortgage rate) is an extra $1,223 a month. This discrepancy has created a feedback loop of limited inventory and growing prices, locking would-be buyers out of homeownership—especially those in the millennial and Gen Z generations. In 2023, millennials made up only 28% of homebuyers despite being in the prime home-buying age. That's just over half as much as it was in 2022 before rates took off. And at just 4%, Gen Zers made up the tiniest fraction of homebuyers. Although millennials are the largest adult generation in the United States, they still own a mere 10% of U.S. real estate wealth. They also accumulated the least real estate wealth during the pandemic housing boom. "The Fed's aggressive rate-hike campaign has worsened the generational homeownership divide. Unlike baby boomers who can afford to buy in cash, millennials and Gen-Z buyers need financing," said Sam Bourgi, Senior Ana- lyst at Creditnews. "That's been harder to get with mortgage rates at 22-year highs. Homebuyers aren't getting any help from the market, either. Homeowners refuse to sell because they don't want to trade their low mortgage rate for a much higher one. So, whatever housing supply makes it to market comes at disproportionally higher prices." Key Takeaways: » More than 40% of all U.S. mortgages were obtained in 2020 or 2021 when rates were at rock bottom—and over half after 2020. » Mortgage originations during the pandemic eclipsed the previous peaks of the post-dot-com boom and the subprime mortgage bubble. » The 30-year fixed mortgage rate is now more than double the effective mort- gage rate—the largest gap since 1976. » Meanwhile, 64.5% of U.S. homeowners are locked in with mortgages below 4%—these homeowners aren't affect- ed by rising interest rates unless they choose to refinance. » The monthly mortgage payment on an average home has spiked 54% between 2021 and 2023, leaving younger buyers unable to afford a home. » Most Millennials and Gen Zers missed the low-rate bandwagon, with buyers from these generations owning just a mere 10% of real estate wealth in the United States and accumulating the least wealth during the pandemic. Mortgage Rates and Originations During the pandemic housing frenzy, mortgage origination hit levels never seen on record. "The Fed's aggressive rate-hike campaign has worsened the generational homeownership divide. Unlike baby boomers who can afford to buy in cash, millennials and Gen-Z buyers need financing." —Sam Bourgi, Senior Analyst, Creditnews