The average American now needs to spend 43% of their income to afford a home, as mortgage rates soar to their highest levels since 2000, reducing housing affordability and causing a decrease in housing supply.
The U.S. housing market is facing dire consequences due to high mortgage rates, a housing supply shortage, and a lack of confidence in the Federal Reserve's actions, according to market expert James Iuorio.
New home sales in the US increased by 4.4% in July, outperforming expectations and highlighting the continued demand for new construction due to a shortage of existing affordable homes. Despite rising mortgage rates, buyers are turning to new homes, causing a decline in sales in the resale market. However, as mortgage rates continue to rise, builder sentiment may be negatively impacted and prices may need to be adjusted to attract buyers.
The surge in mortgage rates has caused housing affordability to reach the lowest level since 2000, leading to a slow fall in the housing market and a potential dip in home prices, although the current market differs from the conditions that preceded the 2008 crash, with low housing inventory and a lack of risky mortgage products, making mortgage rates the key lever to improve affordability.
The housing market in 2024 is expected to remain challenging for both buyers and sellers, with high mortgage rates, steep home prices, and low inventory levels, but if mortgage rates cool as predicted, market activity should increase.
The U.S. housing market is projected to remain stagnant until 2024 due to high mortgage rates and limited supply, according to Fannie Mae economists.
Home prices in the U.S. rose for the fifth consecutive month in June, despite high mortgage rates, with national prices increasing by 0.9% and only down 0.02% from their peak in June 2022, according to the S&P CoreLogic Case-Shiller index. However, there were significant regional differences, with cities on the West Coast experiencing some of the biggest declines. The housing market continues to face challenges due to low inventory and slow new construction.
British home prices are expected to fall by 4% this year due to high interest rates and living costs, despite the shortage of supply, according to a Reuters poll, with potential buyers being kept out of the property market; however, prices are expected to recover from 2024.
Mortgage rates above 7% are worsening the affordability crisis, limiting younger buyers' ability to purchase homes and causing millennials to lag behind previous generations in homeownership, as rising rates and prices erode buying power.
The housing market has experienced significant changes, with high mortgage rates and low inventory leading to slower sales and longer time on the market, but experts predict that mortgage rates will eventually decrease and home prices will continue to appreciate, with no imminent crash expected; the market is expected to shift towards a more balanced state in the next five years, and the suburban market is predicted to remain strong, particularly in areas with rising populations.
The aging population, particularly the baby boomer generation, is fueling the demand for housing, creating a shortage and making it more difficult for younger generations, like millennials, to buy homes.
Mortgage rates remain elevated, slowing housing market activity, and while home prices are not likely to fall significantly, rates are projected to decrease in 2023 and 2024.
Real estate investor Sean Terry predicts a "Black Swan" event in the US housing market within the next year due to affordability pressures caused by high interest rates and housing prices, which could lead to a market crash. However, experts argue that a crash like the one in 2008 is unlikely due to the current housing shortage and limited supply of homes. The future of the housing market will depend on factors such as economic stability, mortgage rates, and homebuilders' ability to increase supply.
Utah's housing market experienced volatility and a contraction due to the COVID-19 pandemic, leading to a decline in home prices and affordability issues, but experts do not predict a crash due to the state's strong economy and growth, although a housing shortage is expected to worsen by 2024. Interest rates have caused fluctuations in homebuilding activity, and despite a dip in housing prices, affordability remains a challenge for many. Predictions for the housing market include a modest price correction, an increase in homebuilding activity and real estate sales in 2024, and a continuing housing shortage. Interest rates will play a crucial role in determining the future of the market.
Housing affordability is expected to worsen due to the delayed impact of higher mortgage rates, with home prices predicted to rise 0.7% year over year and reach a new record high, according to Morgan Stanley.
The housing market is facing challenges due to high mortgage rates and low home sales, leading economists to predict a mild recession in 2024.
Despite a recent slump, research firms including Freddie Mac, Zillow, and the National Association of Realtors predict that home prices will continue to rise in 2024 due to a shortage of housing inventory and strong demand, with NAR forecasting a 2.6% increase. However, Moody's Analytics and Morgan Stanley expect home prices to slightly decrease in 2024 due to declining affordability and increased housing supply.
The United States housing market has seen a 21 percent decline in previously occupied home sales over the past year, continuing the slowdown caused by rising interest rates, while prices continue to rise despite the decrease in sales, leading to a shortage of affordable homes and worsening home affordability for the foreseeable future.
The global risk of housing bubbles has significantly decreased in 2023, with only two out of 25 cities surveyed being at risk, down from nine in previous reports, due to rising interest rates and the end of cheap financing in the real estate sector.
The Virginia housing market is expected to improve in 2024 after experiencing a sharp decline in sales activity in 2023 due to high home prices, low inventory, and rising interest rates. Despite the current challenges, there is still a demand for homes, but the lack of options and high interest rates remain a problem for buyers and sellers.
The US housing market is facing tough conditions with low affordability, high mortgage rates, and a slowdown in sales that is expected to last for a long time, according to Redfin CEO Glenn Kelman.
Rising mortgage rates are impacting home affordability, which has been declining since early 2021, causing some sellers to reduce their asking prices, but the lack of available properties remains a challenge for most buyers.
The growing Latino population in the US, with a projected increase to 100 million in the next 20 to 25 years, will have a significant impact on the housing industry, as this demographic generates a large amount of economic activity and will make up a larger share of homebuyers. However, Latinos face various barriers to entry, including lower homeownership rates, lower incomes, and affordability challenges. Efforts are being made to provide resources and programs to support Latino access to homeownership opportunities.
The housing market is slowing down due to soaring mortgage rates, which could lead to an economic downturn as home construction is curbed and growth prospects falter, according to billionaire investor Bill Gross.
The current housing market is so unaffordable that only three extreme scenarios, including a 55% spike in US incomes, would return it to pre-pandemic affordability.
Bank of America economists warn of upcoming turbulence in the housing market due to high mortgage rates, comparing the current situation to the housing market of the 1980s rather than the crash of 2008, but they do not expect another housing crash like 2008 due to differences in housing development, mortgage debt, and legislation.
The U.S. housing market is extremely unaffordable, with mortgage rates reaching a multi-decade high at 7.49% and incomes needing to increase by 55% for affordability; however, experts suggest that home prices and mortgage rates are unlikely to decrease soon due to low inventory and high demand.
Many young Americans are concerned about the difficulty of purchasing a home due to the high cost of real estate and stagnant salaries, particularly in cities experiencing intense gentrification, with Los Angeles, California seeing the largest increase in housing prices at 23.8% since September 2022, followed by San Diego, California and Richmond, California.
The housing market is currently experiencing high mortgage rates and rising home prices, making affordability worse than in 2008, according to Goldman Sachs analysis. Despite stronger consumer fundamentals, housing affordability has deteriorated beyond 2006 levels, and without an increase in home supply, unemployment, or a drop in mortgage rates, home prices are expected to continue climbing.
Despite rising mortgage rates, the US housing market offers hope for potential buyers as an increase in supply and decreased competition may lead to lower costs, according to a report by Redfin.
The U.S. housing shortage has worsened in suburbs and small towns, according to a report by nonprofit Up for Growth, which found a housing deficit of 3.9 million homes in 2021, representing a 3% increase from 2019, as the shortage spreads from coastal and urban areas to outlying regions.
American families are facing a variety of financial challenges, including inflation, high costs of living, and increasing mortgage rates, which are making it difficult for young families to buy homes; in addition, sudden job loss can lead to a financial doom spiral.
Mortgage rates are expected to decrease significantly by the end of 2024, but a shortage of available homes will lead to higher sales prices for the next few years. Despite the drop in rates, the low inventory of new homes will drive up purchase costs. Additionally, a sluggish economy, rising unemployment, and declining inflation may lead to a recession in early 2024. However, the combination of these factors will eventually help bring down mortgage rates further in the following years.
The housing market is expected to experience a downturn in the near future due to factors such as high mortgage rates, high home prices, and limited supply, making it increasingly difficult for homebuyers to afford a home.
The U.S. housing market is being negatively impacted by "Bidenomics," as mortgage rates reach their highest level since 2000, leading to a decrease in homebuyers and a limited number of homes on the market, while high inflation rates are making it difficult for Americans to afford basic necessities.
The current housing market is resembling that of the 1980s, with high inflation, rising interest rates, and a boom of homebuyers coming of age, potentially leading to a similar "housing recession" where home sales stay low and prices stagnate; however, demographic changes, such as millennials reaching prime homebuying age, could support home prices despite rising mortgage rates.
Economists predict that 2023 will have the slowest home sales year since the 2008 housing bubble burst, with persistently high mortgage rates and low inventory deterring buyers.
The current housing market is unaffordable for many would-be homebuyers, with high prices, low inventory, and rising mortgage rates, making it the least affordable it's been since 1984. Returning to normal affordability levels would require a significant decline in home prices, a drop in mortgage rates, or a substantial increase in household incomes.
Despite predictions of a soft landing for the U.S. economy, many Americans are still preparing for a recession by monitoring spending, limiting discretionary purchases, and considering long-term savings investments, according to surveys. Additionally, some homebuyers are hopeful that a recession will lead to lower home prices and mortgage rates, making it a more opportune time to buy. However, the lack of housing inventory remains a challenge for buyers, with over 60% reporting difficulty in finding suitable homes within their budget range.
The graying Baby Boomer generation is now buying more homes than Millennials due to their accumulated wealth and ability to pay cash, leading to a shift in the housing market.
Mortgage rates may see a slight decline in 2024, potentially offering some relief for homebuyers, due to possible rate cuts by the Federal Reserve, decreasing inflation, and a cooling job market.
Summary: Capital Economics predicts that mortgage rates in the United States are unlikely to fall below 6% before the end of 2025, due to higher forecasts for U.S. Treasury yields, which will dampen housing affordability and sales volumes.
