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Patrick Boyle On Finance
The Frozen US Real Estate Market.
Dec 16, 2023
The podcast explores the frozen US real estate market due to higher mortgage rates, with affordability worsening at the fastest pace on record. It analyzes the impact on various sectors of the industry and discusses the concept of household formation. The chapter also explores the concept of assumable mortgages and potential solutions to improve affordability in the current market.
20:31
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Quick takeaways
- The recent increase in interest rates has significantly decreased housing affordability in the US real estate market, but house prices remain near their all-time high due to low inventory.
- Homeowners with 30-year fixed-rate mortgages are disincentivized from moving houses, contributing to the frozen real estate market, while low housing starts and demographic trends of aging in place further tighten the supply of housing.
Deep dives
US Real Estate Market: Low Inventory and Housing Affordability
The US real estate market is experiencing a significant decrease in housing affordability, primarily driven by the recent increase in interest rates. Despite this decrease, US house prices remain near their all-time high due to low inventory. Home buyers today need to earn $115,000 per year to afford a median priced home, compared to $45,000 per year in 2012. Low inventory is causing both buyers and sellers to hold out for better circumstances, resulting in a decline in home sales and a frozen real estate market.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode