NASHVILLE, Tennessee — Growth is expected to be flat this year as high mortgage rates and recession fears hit home prices, one expert said.
“We expect slowing home price growth to continue,” said Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association, at the association’s annual meeting in Nashville, Tennessee, on Sunday. said.
House prices are already starting to ease. According to Case Schiller, house prices fell It surpassed the previous month for the first time in 20 years from June to July. The latest figures for August will be reported on Tuesday morning.
In addition to the potential recession on cards and mortgage rates near or above 7%, “we’re already seeing a pretty dramatic pullback in housing demand,” Kan said. .
As such, he expects home price growth across the country to “flatten out” in 2023 and 2024. This could be a “silver lining” for some, as it brings home prices back to more “reasonable levels,” Kang added.
A slowdown in house price growth should allow households to catch up on wages and savings and buy homes that are currently too expensive.
But he also warned that house prices could actually fall in some markets. House prices have already fallen in some markets. pandemic boomtown like austin and phoenix famous expensive San Francisco Bay Area.
Still, even if prices drop, don’t expect a surge in inventories as you’re sitting at ultra-low interest rates that people won’t enjoy again in the near future.
According to June Data from the Federal Housing Finance Agency, nearly a quarter of homeowners have mortgage rates below 3%. And the interest rate for the majority of owners (93%) is less than her 6%.
Moreover, supply is likely to be tight.
Demand for housing should pick up eventually, though, given the number of people who need their own homes right away.
MBA Kan estimates there are 50 million people in the demographic between the ages of 28 and 38, some or many of whom could become homeowners in the future.
According to Kang, only 39% of people under 35 are homeowners, while those between the ages of 35 and 44 will rise to 61%.
So as people get older, “if we stick with these trends, I’m sure we’ll see very demographic factors supporting housing demand for quite some years,” Kan said. .
Thinking about the housing market? Write to MarketWatch reporter Aarthi Swaminathan ([email protected]).