Recession fears are mounting in the housing market and beyond as the stock market continues to fall and the Federal Reserve puts increased pressure on mortgage interest rates to cool buyer demand. After reaching unsustainable levels, home prices are already falling in a number of overheated markets, and a housing recession could accelerate that downturn for months to come, Realtor.com reports.
Mortgage rates have risen from an average of 2.87% this time last year to 6.7% for 30-year fixed-rate loans during the week ending Sept. 29, making monthly mortgage payments roughly 74% more expensive than they were just a year ago. Whether the housing market enters into a recession or not, prices will have to fall from historic highs in order for homeowners to sell their homes.
Home prices are expected to fall—whether the nation succumbs to a recession or not. Buyers simply can’t afford the giant price tags plus the highest mortgage rates in 15 years.
“There’s going to be a coast-to-coast downturn in the housing market. It’s going to be brutal,” says [Mark] Zandi. “No part of the market is immune.”
Places that experienced the biggest run-ups in prices during the COVID-19 pandemic, with the most investors bidding them up further, will see the steepest declines, say real estate experts.
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