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Decoding the 2025 Housing Market with Bill McBride
Jan 15, 2025
Bill McBride, a housing market expert and author of the influential blog Calculated Risk, discusses the future of the housing market. He predicts 'seven years of purgatory' due to high mortgage rates, which are expected to stay above 6%. Bill emphasizes the importance of inventory over sales numbers for understanding market dynamics. He explores demographic shifts, the impact of rising wages, and the ongoing affordability crisis. Additionally, he shares insights on the housing landscape as we approach 2025 and the potential outcomes for home prices.
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Quick takeaways
- The current housing market is characterized by stagnant inventory levels due to homeowners' reluctance to sell low-rate mortgages, impacting availability.
- Increasing mortgage rates above 6% alongside demographic shifts may influence housing affordability and require government intervention to expand lower-cost housing supply.
Deep dives
Impact of Mortgage Rates on the Housing Market
Mortgage rates have significantly influenced the housing market dynamics, particularly with the shift from historically low rates during the pandemic to the new normal rates of 6% to 7%. Experts note that the absence of distressed sales has led to a stabilization in home prices, albeit with minimal increases in real terms. With the current rates, while inventory levels are up, many homeowners are reluctant to sell due to their existing low-rate mortgages, resulting in stagnant inventory. Overall, the increase in mortgage rates has not only affected demand but also limited the number of homes available on the market, creating a complex scenario for buyers and sellers.
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