Skandar Mrad, shown here on vacation in Italy, is looking for a home in the Los Angeles area.
When Skandar Mrad decided late last year to buy his first house, his top priority was location.
Mrad, a gay man living in the Los Angeles area, has spent much of his adult life commuting several hours a day to his job at the NASA jet propulsion lab in Pasadena, California. When he found an apartment closer to work, he noticed a major improvement in his life.
"That commute just tore me apart. Mentally and physically, I saw that I was deteriorating," said Mrad.
However, his roommates moved out, and Mrad, 40, decided it was time to become a homeowner. He originally wanted to live within five miles of his work, but quickly found that may not be realistic in a hyper-competitive market.
"It was so strange for me to see a line of people outside an open house waiting to get in. I couldn't believe there was that much of a demand. … I kind of didn't know what I was getting myself into," Mrad said.
He began looking for homes early this year, and that five-mile radius soon expanded to 30 miles. At the same time, the Federal Reserve began hiking its benchmark interest rate, sending mortgage rates soaring. The 30-year fixed rate mortgage jumped to 5.78% the week of June 16, according to Freddie Mac, seeing its biggest one-week jump since 1987.
That has led to rapid changes in what Mrad might have to pay. Mrad, who is looking at small single family homes and condos, said he has seen the potential monthly payments on similar properties rise by more than $500 a month since his search process began.
Even with those higher rates, the competition has been fierce. In May, Mrad said he bid more than $600,000 for a property listed at $575,000. The winning bid then came in at $650,000.
"I can't win in this market. There's no way," Mrad said.
Mrad's frustrations are shared by many prospective home buyers across the country over the past two years. Home prices shot up, starting in 2020, as stimulus from Congress and the Federal Reserve coincided with a work-from-home boom.
This rapid rise in the cost of a home is particularly impactful for the LGBTQ community, which is less likely to own a home. First-time homebuyers have to pay the higher prices without getting a boost from the value selling an existing property that they own.
According to the Williams Institute at the UCLA School of Law, 50% of LGBTQ adults and 64% of LGBTQ couples own their own homes. For non-LGBTQ groups, those numbers are 70% and 75%.
Historical data on home ownership rates by sexuality were not tracked by the Census Bureau, but surveys from the LGBTQ+ Real Estate Alliance suggests that home ownership for couples and singles in the community has been trending up since the Supreme Court legalized same-sex marriage in 2015. Zillow reported in 2021 that LGBT people accounted for 12% of homebuyers, up from 7% in 2019.
Some real estate firms have started initiatives to help this growing group with the homebuying process, such as the KW Rainbow Network from Keller Williams.
Ryan Weyandt, the CEO of the Alliance, said President Joe Biden's executive order that offered broader protections against discrimination on the basis of gender identity or sexual orientation has also boosted confidence for buyers. But, he added, the current home-ownership gap has put the community at a disadvantage.
"I do think it is an unfortunate reality that we are probably going to be disproportionately impacted by higher costs, if not prohibited from purchasing all together," Weyandt said.
President Joe Biden signs executive orders in the Oval Office of the White House in Washington, after his inauguration as the 46th President of the United States, U.S., January 20, 2021.
Tom Brenner Reuters
Discrimination, whether during the sales process or well before, can also hold back LGBTQ people from becoming homeowners. Studies show that LGBTQ people are more likely to experience homelessness during their youth, according to the Williams Institute.
Housing instability and other forms of discrimination can lead to LGBTQ people falling behind financially and in school, making the climb to home ownership even steeper.
"It's an ugly connected line of dominoes, that starts all the way back when you're 15-16 years old and has an impact on your ability to own a home in your 30s," Weyandt said.
Location can also serve as a barrier to homebuyers in the community. Research from Zillow indicates that LGBTQ homeowners are more likely to live in urban areas than their cisgender peers, and that homes in areas that explicitly offer anti-discrimination protects can be $127,000 more expensive.
Kristopher Houck, a 23-year-old music producer in Orlando, said he is shopping for homes in the Los Angeles area with a friend after growing up in a religious family in central New York and Florida in part because he wants to live in a more accepting area.
"I couldn't relate to most of the community. I always felt alone. It was 'oh, there's that gay kid.' They all knew me as the 'gay kid,'" Houck said. "...I don't feel that it's my responsibility to have to put up with that for the rest of my life."
After two years of rising prices, there are some signs that the red hot housing market is starting to cool. Mortgage applications and housing starts have fallen sharply in recent weeks.
On Wednesday, the Federal Reserve signaled even more rate hikes in 2022, which could further dampen demand.
Mrad said that his mother offered to let him live with her for a while to wait until the market cools off, but her house is too far from his job.
"I've visited my mom after work, and it is a two-hour drive minimum," he said. "And even just a one-time drive to her, I get there and I plop on the couch. I'm exhausted, I have road rage, I have no energy to do anything. I can't imagine doing that habitually on a daily basis."
Mrad said he is looking into using his retirement savings to beef up his purchasing power, or potentially working with his sister to buy a duplex. In the meantime, the potential cooldown in the housing market hasn't yet filtered down to his day-to-day search.
"I don't see that. I've looked at houses [recently] and there's lines still outside of people waiting to look at open houses. If the data is nationwide, then it's skewed because that's definitely not what we're seeing in Los Angeles," Mrad said.