Real estate agent Mauricio Umansky warned of a “perfect storm of total unaffordability” in the housing market due to high interest rates, low supply, and hedge funds buying up single-family homes.
With mortgage rates over 7% and applications at their lowest since 1995, Umansky said prices won’t drop until the market feels more “pain.”
He argued supply needs to increase for affordability and interest rate cuts.
Lack of new construction and buyers/sellers staying put due to mortgages were cited as reducing inventory.
“We’ve got super high interest rates above 7%. Mortgage applications are as low as they’ve been since 1995. And then we’ve got no supply,” Umansky said.
“Until we start seeing the pain and prices drop, I don’t see the government dropping interest rates. So, we really need to allow the markets to be markets, and for affordability to start happening so that the government starts dropping interest rates again,” he said.
While favoring free markets, Umansky suggested government limits on hedge fund home buying may be needed as Wall Street investors deplete the supply in many areas.
Principal Keith Fitz-Gerald agreed the government needs to curb how hedge funds can purchase large numbers of homes, particularly in middle America, to boost available properties for regular buyers.
“The government does have to get involved a little bit and perhaps, you know, figure out some way of limiting the way that the hedge funds are able to do this, because right now in Middle America, they [hedge funds] are just eating up so much product that there’s just no supply hitting the market,” Fitz-Gerald said.
Both experts portrayed current conditions as unsustainable and in need of intervention to remedy unaffordability.
