196

Real estate expert projects a long-term housing shortage for the sector in 2022

Real estate expert projects a long-term housing shortage for the sector in 2022
Jordan
Major
4 months ago
3 mins read

With rising interest rates and the Federal Reserve’s decision to cease buying mortgage-backed securities, the issue of how this would influence affordability and demand has emerged.

Speaking with CNBC, Realtor.com’s Danielle Hale discussed the subject of increasing the monthly payment in conjunction with rate increases and how it would affect the housing and mortgage markets for the rest of the year. 

Hale noted that due to increasing mortgage rates and rising costs, a significant portion (about half) of the increase in the monthly payment since last year has already occurred.

“The monthly payment is going up. In fact, it’s already gone up and about half of the increase so far relative to one year ago is due to higher mortgage rates. The other half is due to higher prices so it’s really a one-two punch of both higher mortgage rates and higher prices that buyers are grappling with in the housing market today,” she said.

Homes will still sell close to recent highs

It’s worth mentioning that the real estate expert added that so far it hasn’t impacted demand and the market is still likely to see home sales continuing close to recent highs.

She indicated that approximately 40 million millennials are in that range to purchase today, regardless of whether “it’s the right time for the economy.”

“Buyers are interested in making a home purchase and making a move. We have a large generation of millennial homebuyers who are in the peak household formation and home-buying years, with over 45 million millennials in the age range of 26 to 35. That’s a very powerful tailwind for housing market demand it’s just the right time for them, regardless of whether it’s the right time in the economy.”

In total, 5.8 million homes were required to accommodate families in the preceding decade, but they were not constructed. That’s created a long-term shortage scenario, and since builders haven’t been able to bring those homes to market, it’s resulted in the frenzy that the housing market is currently experiencing.

Finally, Hale emphasized that it’s a mix of what’s happening in both markets; with also high rental prices, which means that even while property prices are high, remaining and renting isn’t a viable choice for many prospective purchasers; as they’re looking at greater expenses there as well.

Watch the video: Long-term housing shortage situation in 2022

Latest News

Join us on Twitter or Telegram

Or follow us on Flipboard Flipboard

Like the article? Vote up or share on your social media

Recommended content

Weekly Finance Digest

By subscribing you agree with Finbold T&C’s

Jordan Major
Author

Jordan is an investor and market analyst. He's passionate about stocks, ETFs, blockchain, and digital assets. At Finbold.com, he delves into the technicalities to obtain future trends for new market traders and gives insights into user-friendly platforms for beginners.

AD