Mortgage rates in 2022 have soared so fast that those who bought homes just months apart are now on very different financial paths. The good fortune of some buyers locking in historically low interest rates could pay off for decades and influence their life choices. Many who entered the market late have shifted from fear of missing out on opportunities to actually missing out.

Elizabeth and Philip Martin of Roanoke, Virginia, began shopping for a home in the spring of 2020. That's when Philip, now 36, landed a job as a high school administrator, which confirmed that they would stay in the area.

That August, the couple bought a three-bedroom house for $239,000 with a mortgage rate of 2.875 per cent, less than half the national average today.

"Whenever I feel like I'm having a bad time," says Elizabeth, a 35-year-old high school teacher, "I think, 'I can pay off my house with a 7 per cent interest rate.'" There, what else could I do but the grace of God."

Three years later, Kiana Sampson of Woodbridge, N.J., and her fiancé found themselves in a very different situation when they got engaged and began looking for a home. 31-year-old Sampson, a membership coordinator for a local realtor association, said they were pre-approved for a 6 per cent mortgage in March.

"We obviously came into the housing market at a terrible time," Sampson said." My fiancé, he always says, 'If we could have been born earlier or later ......'"

Entering the housing market at a favorable time has always been great, but the dramatic swings in the housing market over the past three years have created a financial and emotional divide between different groups of recent buyers.

"The real financial winners are the mega-popular homebuyers who have locked in mortgage rates of around 2-3%," says Odeta Kushi, deputy chief economist at First American Financial Corporation.

Mortgage rates initially fell as the Federal Reserve lowered rates at the start of the Covid-19 pandemic. They later jumped back up as the Fed began a series of rate hikes in March 2022 to combat inflation. Fed officials signalled earlier this month that they may end rate hikes for now.

The average rate on a 30-year fixed-rate mortgage is now 6.39 per cent, according to Freddie Mac. The typical monthly payment for the median-priced existing single-family home has nearly doubled in two years, from $1,033 in June 2020 to $1,933 in June 2022, according to the National Association of Realtors, a trade group.

Since the Martins bought their home, they've had room in their budget to put in some new flooring and carpeting, as well as a wood cooker in their den. They have also bought a new car.

Elizabeth Martin says that as someone who holds student debt and has type 1 diabetes, she sometimes feels financially unlucky." We don't always notice those times when we're the lucky beneficiaries," she said." This is definitely one of those times."

Since the Martins purchased their home, the purchasing power of homebuyers has declined significantly. In August 2021, the highest-priced home a middle-income family could afford at an average mortgage rate reached $593,166, according to a First American analysis. Assuming a 20 per cent down payment, this figure plummets to a recent low of $387,313 in October 2022.

For homebuyers, it's like going to the bathroom while they're playing Monopoly and realising that every price on the board has almost doubled. Many of today's potential buyers can't afford to get their feet wet, literally. Some of Kiana Sampson's friends managed to buy houses in 2019 and 2020, in convenient locations and with lower mortgage rates." I'm a bit jealous," she says.

Many who buy when their money is most spent, however, face bad competition, notes Kush, and may have dropped contingencies or settled for less-than-perfect homes. According to the National Association of Realtors, houses are typically on the market for a median of 30 to 40 days in 2019, dropping to the mid-20s in 2020 and to a dozen days in 2021 and 2022.

The difference between buying a home now and buying a home a few years ago could hit Americans' wallets for decades to come, economists say. Refinancing may help, but it probably won't come close to closing that gap.

According to calculations by Andy Carswell, a professor of consumer economics at the University of Georgia, assuming a buyer buys a home in June 2020 for $300,000, about the median price of an existing single-family home at that time, with a 20 per cent down payment and a 3 per cent mortgage rate, they will pay about $89,000 in interest over the first 15 years of a 30-year loan. By comparison, someone buying in June 2022 for the same price with a mortgage rate of 6 per cent would pay about $190,000 in interest over 15 years.

Caswell's calculations show that if interest rates were to fall, enabling a 2022 buyer to refinance at 5 per cent five years after purchase, that figure would fall to about $168,000.

However, there is a cost to refinancing - in this case, about $7,000 if it is 3 per cent of the new loan value, which is a typical percentage of fees and closing costs.

Jeffrey Zabel, a professor of economics at Tufts University, said that over the past few decades, good timing has often been less about favourable prices and interest rates and more about what happens in the housing market a few years after the purchase.

The problem for potential buyers, Zabel says, is that while timing is important, it's hard to know in the moment whether a certain time is fortuitous.

According to a study co-authored by Zabel in 2020, renters who bought into a relatively stable housing market between 1989 and 1999 accumulated more wealth over the next few years and decades as house prices appreciated than those who bought into a more volatile market between 2001 and 2007. However, buying in any one of these periods was no more advantageous than buying in any other year within that time frame.

Buyers who missed out on lower prices and interest rates in the early 2020s say it's sometimes hard not to focus on what could happen.

Diana Capozzi, a 39-year-old veterinarian, is distressed that the moment she was ready to buy is nearing the end of rising home prices. in March 2022, she purchased a three-bedroom home in Lebanon, New Hampshire, for $570,000, about $170,000 more than it sold for less than two years earlier.

Her mortgage rate is 3.875%, which is ideal by today's standards, and she feels fortunate to own it. Nonetheless, she sees some of her friends refinancing at lower percentages in 2020, and she wishes she could have become a homeowner sooner.

She wonders if doing so would have put her on a more comfortable financial track as she saves for her children's college education and continues to pay off her vet school loans. Capozzi says that if she had bought her house a year earlier, the amount she would have saved on her monthly mortgage would have covered most of the student loans she owed each month.

The house she bought is on a road called "Poverty Lane", which she hopes is not a bad sign.

Economists say that because home ownership is a powerful creator of wealth, people who wish they had bought a home earlier today still have a lot to gain.

"If I were 30 and had missed the last three years, I wouldn't beat myself up too much," says Bill McBride, author of the housing-focused economics blog Calculated Risk." I would just say, 'Well, I've got a lot of years ahead of me.'"

Americans remain more confident in real estate than any other investment. In a recent Gallup survey, 34 per cent of Americans rated it as the best long-term investment, down from 41 per cent in 2021 and 45 per cent in 2022.

For the purpose of building long-term wealth, when a person buys a home is usually less important than whether they do, McBride said. And for many, soaring house prices and interest rates have temporarily shut down that possibility.

Jessica Jordan is glad she took advantage of the window of opportunity before it closed.

In 2020, after eight years of renting flats in the Chicago area, Jordan, now 37, and her wife had grown tired of communal laundry facilities, window air-conditioning units and uncovered car parks.

The couple had thought they couldn't afford a house, but as mortgage rates began to fall that spring, they began looking. in August, they bought a $295,000 house in Lombard, Illinois, with a mortgage rate of 2.875 per cent and felt they had taken a long-awaited step towards mature adulthood.

Jordan, who works for a distributor of automotive marketing products, believes that if they hadn't bought their home before house prices and interest rates soared, they would still be in their old flat today." I think we'd be living here forever," she says.