National Housing Conference CEO David Dworkin stressed Monday that the current slowdown “is nothing like the last housing crisis,” arguing that “all the major fundamentals are very different.” .
“Because the law of supply and demand will never be abolished, we have a very different situation in which instead of a demand-driven crisis, we actually had a supply-driven crisis, and house values and house prices rose significantly.” Dworkin saidCavuto: Coast to Coast.”
He noted that in 2008 the market was “fueled by toxic mortgages and people were receiving interest rates on a teaser basis that they probably couldn’t pay back.”
For months, the housing market was buoyed by record-low interest rates, but at the same time U.S. homebuyers were flush with stimulus cash and craving more space during the pandemic. began to flock to the suburbs.
However interest rate sensitive The sector is starting to cool significantly as the US Federal Reserve (Fed) tightens policy at the fastest pace in 30 years to curb persistent inflation.
Policy makers have already approved two consecutive 75 basis point rate hikes in June and July and confirmed another super-large rate hike is under consideration in September.
After the rate hike, the average interest rate is 30 year fixed mortgage – Most popular among new homeowners, rising to nearly 6% in June, but has slowed since. The average interest rate for a 30-year fixed-rate mortgage hovered around 5.55% in the week ending Aug. 25, according to recent data from mortgage lender Freddie Mac.
This is significantly higher than just a year ago when interest rates were 2.86%.
Rapidly rising borrowing costs coupled with high home prices have forced many entry-level homebuyers out of the market.
According to a recent report from Redfin, Cancellation of home sale It further surged to a two-year high in July as buyers withdrew from the market. About 63,000 home purchase contracts were canceled in July. This represents his 16% of the homes that were contracted that month.
“Sure, we’re seeing a later time, but there’s still a lot of need, and housing affordability is the worst in most people’s lives.
early this month it became clear According to the National Association of Realtors, the national median existing single-family home price rose 14.2% year-on-year to $413,500, surpassing $400,000 for the first time.
“Florida may be one of the markets that continue to have steady demand, but it’s going to have a much smoother recession impact. I think that’s what we’re really dealing with here. ‘ said Dworkin to the host neil caboot on monday.
“Also, in many markets, although we haven’t seen a significant increase, it’s pretty normal and will likely stay pretty much the same.”
“Prices will fall in the most inflated markets, but with so high demand and so short supply, the response will still be sluggish,” he continued.
“This is a serious problem for Chairman Powell because one of the ways he controls inflation is by raising rates, and if supply remains out of line with demand, a big tool in his toolbox will undoubtedly slow down. because it does.”