As BLACK ENTERPRISE previously reported, interest rates for homes adjusted by the Federal Reserve are having an adverse effect on the home market, but new data illuminates just how bad the problem is becoming.
As Fortune reported, the initial cost of homeownership is so high that it would take a combination of pay rising by 55%, interest rates falling by 4%, and home prices falling by 35% just for it to be attainable for most Americans.
According to Andy Walden, vice president of Enterprise Research at ICE Technologies, “But just imagine house prices falling 35% or your boss giving you a 55% raise. Not likely, right? Those are massive movements that we’re talking about. None of them are going to happen in a vacuum. None of those one single factors is going to make the move.”
Sam Khater, chief economist at Freddie Mac, says the biggest problem affecting the market is low inventory.
“Unlike the turn of the millennium, house prices today are rising alongside mortgage rates, primarily due to low inventory,” Khater told Fortune. ”These headwinds are causing both buyers and sellers to hold out for better circumstances.”
On Zillow, a marketplace style listing of homes in a given area or zip-code, the average price of homes listed increased by 4% between the months of July and August; and though there has been a small increase in the number of homes available, according to the website’s data, this does not necessarily mean that there is relief coming to the housing market.
Walden said that it is a trend worth monitoring, however, even if it may not be a prediction that the market is about to improve immediately,
“We’ll be watching that inventory data really, really closely,” he said. “That’s really going to tell us where home prices are going late this year.”
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Source: Black Enterprise