Housing Prices to “Soften" as Affordability Crisis Hits Breaking Point

Episode #951
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Housing prices won’t budge, but there could be some relief on the horizon for homebuyers. As America’s affordability crisis continues to strain consumers, one of the most considerable costs, housing, is much to blame. Rising mortgage rates are making monthly payments significantly more expensive than just a few years prior, but how long can this last? According to the Vice President of Enterprise Research Strategy at ICE, Andy Walden, not much longer.
Every month, Andy’s team at ICE releases their Mortgage Monitor data reports, sharing valuable insights on what’s happening in the housing market. On this BiggerNews, we’re asking Andy to share what the data is telling him about home prices, mortgage rates, housing inventory, and buyer demand but, even more importantly, where we could be headed in 2024 and whether or not this hot housing market still has room to run.
While there has been huge home price growth over the last few years, Andy reckons prices could begin to “soften” as affordability reaches its breaking point. With demand retreating from the market and housing inventory still on the rise, prices may start to decline, and even if interest rates do fall again, we may not see the uptick in demand many home sellers are waiting for. Stick around as we unpack exactly what’s moving the housing market with ICE’s Andy Walden!
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Hear Our Past Interviews with Andy:
How the Housing Market Could Correct WITHOUT Home Prices Falling: www.biggerpockets.com/blog/on...
New Mortgage Report: Originations Plummet, Buying Power Wiped Out: www.biggerpockets.com/blog/on...
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BiggerNews: Housing Inventory Up 24%, Are We Returning to “Normal”?
www.biggerpockets.com/blog/re...
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Grab the Mortgage Monitor Report:
www.icemortgagetechnology.com...
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Connect with Dave:
BiggerPockets: www.biggerpockets.com/users/d...
Instagram: @thedatadeli or / thedatadeli
Show notes at: link.chtbl.com/BPRE
00:00 Intro
01:37 Home Prices Hit New Highs
06:08 How to Predict Market Trends
09:53 Will Prices Soften?
11:37 Why is Inventory Rising?
19:09 Rate Cuts Won’t Solve This
27:15 The Cure for Low Affordability
29:15 Home Equity Breaks Record

[@brady_morgan]

I have to say, I am not convinced that the housing affordability ratio will return to around 25%. If real estate continues to outpace inflation, as it "always" has, then it is not reasonable to expect affordability to stay the same. Theoretically you would expect the affordability metric to slowly creep higher as a percentage, in reality, I dont believe it would slowly creep but rather occur in shorter bursts as stresses in the market reach a certain threshold. It seems that is what we have seen recently. As the guest stated himself, there would need to be massive change in the market to get us back to around 25% expense to income ratio. Would it not be more reasonable that affordability more or less levels off where it is now, and that becomes the new normal at least for the next decade?

[@crystaltiki]

I teach financial literacy and the metric is 28% housing debt OR 36% combined debt, to be affordable. So I agree with you.

[@fojura22]

This is the most informative up to date podcast I’ve listened in a long time. Amazing guest

[@jasonb4770]

Interest rates are still historically low. There is really no reason for them to come back down to artificial levels again other than government intervention.

[@makethingshappen8427]

One large point they miss since they look at past few years is demand is driven by excess cash due to pandemic era saving and govt stimulus! You can reduce rates it won’t increase prices. People won’t be looking at buying houses when there’s layoffs and baked in inflation. Based on conservative estimates people have just spent their excess savings in march and you can see the impact already as everyone stops spending.

[@makethingshappen8427]

@@dissident112 its already underway. Im seeing things slow down at my business past few months hence I started to research it now its spreading to other parts of economy.

[@TarynMooreRealtor]

It's the economy hyperventilating. Take a deep breath and seller carry on

[@TEFgolfer11]

Great answers from the guest!

[@remery6494]

Love this intel. Anybody know what data sources Andy and Dave get their information? I’d love to do deep dive analysis myself !

[@therealphee]

Good video. Can I offer a tip for the audio mix? It sounds like the compression is too high on the host’s microphone. Turning the gain down a bit and slowing the attack and release will make the audio sound less hot and more pleasing to the ear.

[@ZupoMobileVentures]

I think we all saw that coming!! Thank goodness for mobile homes!

[@Invest4Cash-Flow]

The main reason is inflation! When the money is devalueting prices can’t go down

[@christinasmith5747]

Seeing a lot of estate sales right now...seems like this will continue for a long time

[@Rothbardo]

Remember to buy negative cash flowing rentals like BP tells you.

[@MegaSuperEnrique]

Why does it say 'LICE' in the background?

[@jennifermascarenas8406]

It says Ice

[@BeleducMartello]

as a reminder to take care of your hygiene

[@MegaSuperEnrique]

@@jennifermascarenas8406 why would it say 'ice'??

[@bloodphantom81]

@@MegaSuperEnriqueas a reminder to keep your beverages cold

[@therealphee]

It’s an unfortunate logo design.

[@matthewbowers6178]

1st - 10th

[@Panda_J1]

lower interest rate is not going to help anyone that cant afford at the moment. its just going to raise home prices again.

[@patrickbennett439]

I refuse to play this game the world is doing. Game is take all your money. Houses especially. Im perfectly happy renting a cheap apartment.

[@user-dq5hw4bp3u]

😂 я вам сейчас расскажу ужасы жизни в Сибири .. мой частный дом 200 м2 отапливаю электричеством 😂 стоимость 1 киловатт = 0.011долларов .. налог на дом 0.15% в год. . вода бесплатная из скважины ) бензин 0.6 доллара литр .. хлеб 0.5 кг -0.3 доллара ) зарплата после уплаты налогов на руки 1200 долларов )

[@cubicleinvestor2553]

I do not think we will see housing prices shoot up if interest rates come down. There seems to be a disconnect from the housing market and the market over all. Underwriters still have to approve these loans at a time where credit card and auto loan delinquencies are rising.