When Katie Cessna and her boyfriend began home hunting in Indianapolis late last year, she was excited. With two good jobs, minimal student loan debt, and enough cash for a 20% down payment, they would soon become homeowners, she thought.

However, Cessna, who is now 31 and works in public relations, didn’t expect to lose six bidding wars in a row. And she and her boyfriend, a pharmacist, weren’t anticipating mortgage rates to continue to climb. And climb.

When they started looking at homes, rates were in the 6% range. By their calculations, a monthly mortgage payment would have been cheaper than renting. But as rates continued to rise, that script was flipped. When they gave up and signed the lease on an apartment this summer, rates were above 7% and renting cost them less each month than buying.

“We thought we had really good financial standing to put us in a good spot to purchase a home,” says Cessna. But “the writing was on the wall. Interest rates just kept going up, and we kept putting in offers and having to go $30,000 to $50,000 over asking. … We didn’t want to end up home-broke.”

Many aspiring homebuyers have had their plans derailed as mortgage rates have more than doubled over the past two years. As rates recently rose to nearly 8%, many first-time homebuyers have dropped out of the housing market. The higher rates, plus home prices remaining historically high, have pushed monthly housing payments up against or beyond their financial limits.

Plenty of younger millennials and members of Generation Z believe they have “missed the boat” to buy a home. Even as mortgage rates have ticked down a little over the past week or so, some believe homeownership will remain far out of reach.

That’s left many homebuyers experiencing anxiety, feelings of failure, and grief over the trajectory they thought their lives would take, say therapists.

“It’s really difficult to find a house they can afford,” says Jung Choi, a senior research associate at the Urban Institute. “Younger buyers with less wealth and little parental support are going to face more challenges.”

Cessna and her boyfriend might have given up for now, but they do expect to eventually reenter the market. Mortgage rates would just need to come down to the 5% range to lure them back in—a prospect they know that could be years off.

“The months we were looking were probably the worst six months of our relationship,” she says. “It was getting excited about something and then getting torn down about it.”

Dashed dreams can lead to stress, anxiety, and anger

Over the past year or so, the topic of not being able to afford to purchase a home has come up in nearly half of therapist Kayla Crane‘s sessions with clients.

“I hear a lot of discouragement, a lot of hopelessness. ‘Are we ever going to be able to afford a home?’” says Crane. She is a licensed marriage and family therapist in Denver. Higher rates “really messed up a lot of people’s plans. It shattered some people’s dreams.”

She had clients who had put a deposit down on a home that was under construction. However, there were delays on the builder’s side, and by the time the home was ready, the couple could no longer afford it at the higher mortgage rate. Their payments would have been about $1,000 more a month. They had to back out of the deal and lost their deposit.

“The idea that they might not be able to afford a home, that can be really anxiety-provoking and scary,” says Crane. “They’re grieving the loss of what they thought their life was going to look like.”

Crane’s seen the higher rates upend the plans and trajectories of her patients. Many had planned to get married, buy a house, and have children.

That might have been possible when rates were below 3%, during the COVID-19 pandemic, but not so much now that monthly mortgage payments have basically doubled over the past three years.

Some of Crane’s patients are even putting off having a new baby because they don’t believe they have enough space to raise the child in their apartments.

She’s spoken to couples who are having to reevaluate whether they can afford to have one parent stay at home to raise the children. They can’t afford the higher mortgage payments on one income.

This sort of stress and feelings of failure often manifest as anger—which can then be directed at the individual’s partner.

“It’s been truly devastating,” says Crane.

Some buyers may have to move to become homeowners

The only way that medical writer Janice Lin, 28, believes that she and her boyfriend will become homeowners will be for them to pull up roots and move to another region entirely.

They live in Silicon Valley’s San Jose, CA, one of the priciest real estate markets in the nation. She expects they will eventually have to move to a cheaper part of the country if they want to purchase a home.

“We feel like we missed the boat,” says Lin. She hadn’t met her boyfriend and wasn’t ready financially when rates were at record lows, bottoming out at an average of 2.65% in early January 2021, according to Freddie Mac data. “It does feel a bit hopeless [now].”

The silver lining for Lin is that her monthly rent payment is lower than a mortgage would be. This allows her to save that extra money and invest it.

“Maybe the new status quo is people don’t own, they rent,” says Lin. “It’s OK to just be renters and not be homeowners at this age.”

Many younger folks are coming to the unwelcome realization that they might not be able to afford to purchase homes, like their parents or grandparents were able to do at their ages, says Julia Baum. She is a licensed therapist serving clients in New York City and California.

Many of her millennial patients are still striving to achieve the American dream of homeownership. But they’re “butting up against the reality that it may not be feasible right now,” says Baum.

“It’s incredibly stressful,” Baum says. “It’s a loss of the future they had anticipated.”

Higher mortgage rates are thwarting homebuyers of all ages

It isn’t just younger, first-time buyers who are buckling under the weight of higher mortgage rates.

Widower Garrett Allen, 53, hopes to purchase a two- or three-bedroom, single-family house outside of Philadelphia. He sees it as an investment that will grow in value over time. Plus, he and his grown son can live in it.

However, he’s lost three bidding wars since he began looking last year. His budget, between $200,000 and $250,000, puts him in direct competition with investors and home flippers. But he doesn’t plan on giving up.

“If you’re renting, all your money is going out the door. If you purchase, you may be paying slightly higher [payments], but you’re building equity,” he reasons. “You’re creating an asset that’s going to be worth more than what you’re spending.”

Even older generations who already own homes are feeling trapped.

Every two years or so, criminal attorney Joe Gutheinz and his wife like to move to a new house. However, the 68-year-old, self-described “military brat” is planning to stay put in the Pearland, TX, home that he already owns, at least for now.

“I don’t want to lose the 2.25% interest rate,” Gutheinz says of his current mortgage. “But we’re gypsies by nature—we love to move.”

The upside to rising mortgage rates

While higher mortgage rates have dashed the dreams of many aspiring homeowners, Agatha Isabel, 31, credits them with helping her to get her offer accepted.

Last year, Isabel, who works in data privacy for a tech company, moved from Brooklyn to Southern California. In December, she purchased a three-bedroom, 1.5-bathroom townhouse less than a mile from the ocean in Huntington Beach, CA. The hordes of buyers dried up as mortgage rates rose, giving her an edge in the market.

She was able to negotiate down the price, and the sellers even bought down her mortgage rate a full percentage point for her first year as a homeowner.

“I had no competition,” says Isabel. “For me, it was less stressful than trying to bid for a home during the pandemic at a lower interest rate.”

For those who can’t afford a home right now, therapist Baum encourages them to explore what it is that they value about homeownership. They can then look at if it’s possible to make progress toward homeownership or achieve their goal through something more attainable.

Crane recommends folks try to reframe their situations and make new plans for the future.

“They have to move forward,” she says.

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