by Risk calculated on 05/24/2023 09:43:00
Today, in the Calculated Risk Real Estate Newsletter: Two Key Housing Themes: Low Inventory and Few Troubled Sales
Every housing cycle is different. One of the key themes in this cycle is that existing home inventory is historically extremely low, as many homeowners are “locked in” to their current homes with low mortgage rates.
Another key theme is that there will be few distressed sales, as most homeowners have substantial net worth.
Here is some data on current mortgage rates and current loan-to-value ratios.
Here is some data from FHFA’s National Mortgage Database showing the distribution of interest rates on 1 through 4 family closed fixed rate mortgages outstanding at the end of each quarter from the first quarter of 2013 through in the fourth quarter of 2022.
This shows the recent increase in the percentage of loans below 3%, and also below 4%, from the start of 2020, as mortgage rates fell sharply during the pandemic. The percentage of loans outstanding below 4% peaked in the first quarter of 2022 at 65.4%, and the percentage below 5% peaked at 85.8%. These low existing mortgage rates make it difficult for homeowners to sell their home and buy a new home, as their monthly payments would rise sharply. This is one of the main reasons existing home inventory levels are so low.
You can register on https://calculatedrisk.substack.com/.