Posted 12/18/2023, 4:00:00 PM
Homeowners Trapped By Cheap Mortgages As Housing Market Faces Affordability Reckoning
- Current homeowners got very low interest rates, making their mortgages valuable assets they can't sell
- High home prices remain disconnected from incomes as rates rise, since few want to give up cheap mortgages
- Homeowners are "poorer" than they think because prices should fall to match higher rates
- Falling rates could help affordability, but prices still likely need to drop as savings get spent
- Dysfunctions may only resolve as Fed policy and necessity bring supply and demand into line