Source: Planetizen —
Reporting for Bloomberg, Tracy Alloway and Joe Weisenthal examine the weirdness in today’s unprecedented housing market.
“Yes, mortgage rates have shot up, crimping affordability. But at the same time, unlike in the era prior to 2008 and the bursting of the subprime mortgage bubble, there are very few forced sellers and therefore very little inventory.” This leaves experts with little previous experience to draw on. “A lot of these statistics that we use to forecast things like housing activity, and by that we mean home sales or housing starts as well as home prices, are at levels that we either haven’t seen before, or if we’ve seen them, we haven’t seen them for decades,” said James Egan, Morgan Stanley’s US housing strategist.
The authors include seven charts that illustrate the strange conditions making today’s housing market the most unusual in recent memory. For example, “The jump in home prices combined with increasing mortgage rates means that housing affordability is now deteriorating at an unprecedented pace, especially when compared to average income.” Meanwhile, “That homeowners who were lucky enough to secure lower rates don’t have much reason to sell into an environment of higher mortgage rates and softening prices, helps create a ‘lock-in’ effect as existing homeowners refuse to put their houses on the market.”
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