Understanding Inelasticity in the Housing Market

Mortgage rates have surged over the last couple of years. But surprisingly to some, actual home prices in the US have been resilient. This has created a historic shock to affordability, with a typical monthly payment on a home purchase soaring. But how long can this go on? Particularly as rates continue to rise, with a 30-year fixed rate mortgage near 8% now, we speak with Morgan Stanley housing strategist, and past Odd Lots guest, Jim Egan, about the impact of this rate environment. He explains why we may be at the limit to how far house prices can rise, and why at this point, the key variable is whether more supply comes onto the market.

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