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A prominent housing economist had declared the U.S. housing market is “stuck and we are not convinced it will become unstuck” until at least 2026 or even later.

In an interview with CNN, Michael Gapen, head of U.S. economics at Bank of America (NYSE:BAC), insisted home prices will remain elevated and could even rise higher while a shortage of inventory will remain. Gapen added that even if the Federal Reserve gets around to cutting interest rates, mortgage rates will not decrease substantially.

“This will take many years to work itself out – there isn’t a magic fix,” said Gapen. “The message for first-time homebuyers is one of patience and frustration.”

Gapen stated the current market environment is also being shaped by an economic anomaly.

“It’s been a weird combination,” he continued. “Mortgage rates rose substantially but so did home prices. That typically doesn’t happen.”

Gapen also noted the situation is being exacerbated by a higher-than-normal number of homeowners who are reluctant to sell their properties.

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“Why would I sell unless I have to?” said Gapen. “Prices have gone up and the mortgage rate is a lot higher. So, I’m content to stay where I am.”

 

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