Challenges to a Full Housing Market Recovery Include Low Mortgage Rates and Affordability

Economists at the National Association of Real Estate Editors predict that the US housing market recovery will be interrupted by a group of homeowners who purchased or refinanced their homes during times of low mortgage rates. This group of people is unwilling to buy or sell, “locked in” by their extremely low rates.

This phenomenon not only reduces the number of buyers in the market, but also the available supply of houses in the market as, even if owners are forced to relocate, they will not sell for fear of losing their rates.

The second challenge to the housing market’s recovery is the decrease in affordability.

Builders have been focusing their efforts on larger, more expensive homes as fewer first-time buyers can qualify for mortgages. Apartment rents, too, have risen to record highs.

“Affordability is at historically low levels nationally on rents,” said Stan Humphries, chief economist at online realty firm Zillow. Rents, he said, are increasing at a much higher rate than incomes.

Rising mortgages will have a significant impact on home sales, and will likely create a drag in the market. With many factors influencing the prospect of a full housing market recovery, economists suggest consumers take as many steps as possible to fully educate themselves regarding choices to buy and/or sell.

 

Read more here- “Low Mortgage Rates Keep Homeowners from Selling,” (Nancy Sarnoff, The Houston Chronicle)

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Olivia is a graduate of Villanova University where she studied Economics and History, minoring in Gender and Women's Studies. She also has experience working with federal legislatures on health care policy, women's issues, and Internet safety.

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