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Moody's Talks - Inside Economics

Housing: Locked In, Locked Out, Locked Up

Nov 13, 2024
Chris Avallone, Head of Merchant Banking at Amherst Group, brings his expertise to dissect the tangled web of the housing market. He delves into the "lock-in" effect that's tethering homeowners to low rates and the "lock-out" dilemma faced by aspiring buyers. Chris offers insights on how local governments can tweak zoning laws to unlock the market, and explores stats about overvalued homes. The conversation wraps with predictions on what lies ahead for housing affordability and the need to tackle the ongoing crisis.
01:09:23

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • The rise in mortgage rates is creating a 'lock-in' effect, discouraging current homeowners from selling and disrupting market liquidity.
  • Aspiring homebuyers face a 'lock-out' due to increased rates and low inventory, steering them toward the rental market.

Deep dives

Mortgage Rate Trends and Implications

The recent rise in the 30-year fixed mortgage rate to around 7% has significantly impacted homeownership affordability. This increase reflects a resilient economy, particularly in employment data, suggesting that previous assumptions by the Federal Reserve regarding interest rates may have been overstated. The higher rates are creating barriers for potential homebuyers, steering many towards rental markets due to a combination of low housing inventory and increased mortgage costs. Consequently, the disparity between the costs of owning and renting is becoming more pronounced, affecting the overall housing market dynamics.

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