55% of Americans say they cannot afford to buy their home in today’s market, according to the CATO Institute 2022 Housing Affordability National Survey
The U.S. housing market is experiencing its second-biggest home price correction of the post-World War II era.
Macro Trends Advisors founding partner Mitch Roschelle attributed the massive correction to Americans’ uncertainty for the markets and their “uneasiness” regarding the economy. He explained on “Varney & Co.” Friday that the “shoe to drop” would be if the nation starts to see a rise in unemployment, which could cause a “leg down” in the housing market.
“A couple of things are going to cause it to turn in the opposite direction, meaning home prices are going up. One is certainty. And when you don’t know if interest rates are going to go up or not. I think that is what is driving a lot of people away from buying because they just don’t know if rates are going to be cheaper in two months, and they’re just going to wait,” Roschelle explained to FOX Business’ Ashley Webster.
“And the other thing is uneasiness regarding the economy. And I think the shoe to drop there would be if we start seeing layoffs, and we start seeing unemployment starting to rise, I think that could be something that causes a leg down in the housing market in a big way.”
Roschelle’s comments come following the massive power shift happening in the real estate market. Arguing that the power has “completely shift[ed]” away from the sellers, further “constraining” the nation’s struggling housing supply.
“Right now, I would say it’s a buyer’s market. I think the power has completely shifted from seller to buyer. Doesn’t mean you don’t see some bidding wars because again, I think statistically across the country, we’re at 3.3 months supply. So that’s still relatively low,” Roschelle said.
“So, if there’s a house that hits the market that’s perfect, and it ticks all the boxes for buyers and there are buyers out in the market, I think you could see sporadically bidding wars, but mostly, you know, it’s one or two people chasing that house. And we’re not seeing that. We’re not.”
In addition to the real estate markets’ supply and demand problem, the average home price is expected to plummet from its pandemic-induced peak.
According to Fortune.com, housing prices in the United States in October 2022 are 38.1% above March 2020 levels. Roschelle predicts that the average home price will have to drop by 10% to 15% from its peak in 2022.
“My 10% to 15% [prediction] is from the peak in 2022, that where we land in terms of average home prices being down 10 to 15%. Which if we’re talking about the stock market, it would certainly be seen as a correction, but not a bear market. The thing to remember is that from February 2020, home prices went up as much as 40% to where we are today,” the housing expert explained.
“So what we’re doing is we’re giving back perhaps at most, a third or a quarter of the gains that we realized. But that doesn’t help somebody who just bought a house at the top of the market and now has something that’s lost 10%,” Roschelle concluded.
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