- Investment manager Louis Naberrier said a crash in the U.S. housing market was “very unlikely” even if mortgage rates soared.
- Navellier pointed to record home wealth as a reason to believe the housing market downturn will not be like 2008’s.
- Demand for housing has taken a hit, but the supply of single-family homes for sale is at its lowest level in years.
Average 30-year mortgages hit a 14-year high on Wednesday, but the surge won’t trigger a U.S. housing market crash like the one seen in 2008, investment strategist Louis Navellier told Insider Wednesday. told to
Popular rate 30-year fixed mortgages surged over the next 6%. Tuesday hot inflation report Market expectations are also rising that the Federal Reserve will continue to raise interest rates aggressively.
But Navellier said high levels of home equity will help limit market declines.
“With mortgage rates well above 6% now, there are very real concerns that housing will continue to be hit hard, but with very high average levels of home wealth, the housing crisis is likely to continue,” Naverier said. It’s very unlikely that it will happen,” he said.
In other words, most homeowners are open to buying, thanks to rising home prices over the past few years. This can be compared to the 2008 housing crisis, when home prices plummeted and many homeowners gave up buying and were eager to sell.
Average home wealth per homeowner rose to a record $300,000 in the second quarter, according to the . Data from CoreLogic.
“Wealth of U.S. homeowners with mortgages (about 63% of all properties) grew 27.8% year-over-year, representing $3.6 trillion overall, or an average of $60,200 per borrower. 2021,” CoreLogic said last week.
According to the Federal Reserve, US homeowners have $29 trillion in wealth in the second quarter. This is a great buffer for homeowners who may be worried about a house price reversal.
However, home prices have yet to fall despite a drop in demand as mortgage rates doubled year-to-date. That could be because the supply of homes for sale remains constrained, according to data from Altos Research.
The supply of single-family homes for sale fell 1% last week to 547,000 units, surging from early summer levels but still approaching multi-year lows.
‘There’s a notable lack of new listings,’ says Altos Research CEO Mike Simonsen said: “We were expecting 625,000 homes on the market right now, but there are only 547,000. Now we are projecting 470,000 by the end of the year, which could easily be too high. Will 2023 start with fewer homes than 2021?”
Median home prices have fallen from recent highs of around $450,000 to just barely $439,900, according to Altos Research.
A U.S. housing crash remains unlikely as demand is depressed but not depressed and the supply of available homes for sale is still constrained.
“The market is not going to plummet because there is a shortage of homes for sale,” Simonsen said.