Odd Lots This Is What an 8% Mortgage Means For the Housing Market
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Oct 19, 2023 
Jim Egan, Morgan Stanley's U.S. housing strategist, dives deep into the housing market's current dynamics. He discusses the surprising resilience of home prices despite soaring mortgage rates nearing 8%. The conversation reveals a looming affordability crisis for buyers, the notable 'lock-in effect' for existing homeowners, and the importance of increasing market supply. Egan emphasizes how rising rates could reshape buyer behavior and impact future price movements, suggesting a cautious optimism amidst challenging inventory levels.
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Housing Market Resilience and Affordability
- Housing market resilience is noteworthy, with prices staying strong despite rising mortgage rates.
- This has led to a significant affordability shock, raising concerns about the market's future.
Affordability Deterioration and Short-Term Improvement
- Significant affordability deterioration characterized 2022's housing market, impacting homebuyers.
- Affordability briefly improved in early 2023 but is declining again with rising rates.
Mortgage Payment Shock
- Mortgage payments have drastically increased, more than doubling since March 2020 lows.
- This affordability shock is evident in rising monthly payments for typical homes.