Plain English with Derek Thompson "The Weirdest Housing Market in Recent History"
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Jul 12, 2024 Mike Simonsen, the data-driven mind behind Altos Research, and Lance Lambert, co-founder of the insightful Residential Club newsletter, dive into the perplexing U.S. housing market. They explore why prices remain sky-high despite plummeting demand and debate the eerie 'locking effect' of low mortgage rates stemming from existing homeowners. The duo analyzes regional discrepancies, the effects of rising interest rates, and the growing influence of individual investors, unpacking a market that seems both bizarre and unpredictable.
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Broken Market
- Today's housing market violates Econ 101 assumptions: higher rates haven't lowered prices.
- Demand is weak, but prices are high due to low inventory of existing homes.
Lock-in Effect
- Existing homeowners are reluctant to sell due to low, locked-in interest rates on their current mortgages.
- This reduced turnover contributes to low inventory and high prices.
Pandemic Move
- Lance Lambert and his wife moved from Manhattan during the pandemic due to lockdown and space constraints.
- This personal experience reflects the increased demand for housing during that time.