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The current state of the housing market has many people concerned, including brothers and housing experts Drew and Jonathan Scott, known for their HGTV show “The Property Brothers.”
Rising home prices and rising interest rates have left many hopeful first-time buyers feeling like buying a home is still out of reach. And according to the brothers, a lack of housing supply is the biggest factor keeping people from buying.
“Right now the biggest problem is that the inventory is really, really bad,” Jonathan Scott told Brian Sozzi on Yahoo Finance’s Opening Bid podcast (see video above or listen below). He noted that the U.S. housing stock is about 4.5 million homes below “healthy market levels.”
“If you don’t have a healthy housing stock, that’s probably the biggest driver [of unaffordability] because competition drives prices up and down,” he added.
Although the Federal Reserve began cutting short-term interest rates, a total of three-quarters of a percentage point since September, mortgage rates have continued to rise.
When the Fed announced its first cut of this cycle in September, the 15-year mortgage rate was at a 52-week low of 5.15%; now the same fixed-rate mortgage is 6.02%, according to Freddie Mac. The 30-year mortgage rate has also risen during that period and is three-quarters of a percentage point higher than two months ago.
Read more: How the Federal Reserve’s interest rate decision affects mortgage rates
It is not just the current real estate market that worries the brothers.
“I’m afraid that in 20 years our children won’t be able to buy a house,” says Jonathan Scott. “No one will be able to enter the market because it will be so ridiculously expensive. We have to tackle that problem now.”
Although the brothers admitted that it is “healthier” for the market if interest rates fall, Jonathan predicted that lenders could introduce new products to “incentivize” young homeowners. longer time.
“Leave on the fact that lenders want you to get their products – they want to lend you the money, they’re going to come up with products that are going to make it a little bit more accessible,” Jonathan said. “The problem, however, is that they are going to extend the depreciation period, so it will take longer to pay back that investment.”
