Navigating the Housing Market: Recession, Rising Rates, and Mortgage Fluctuations

Bank of America economists warn of more "turbulence" in the housing market due to high mortgage rates, comparing the current situation to the housing recession of the 1980s rather than the crash of 2008. They note that there are no signs of excess housing development or excessive mortgage debt like in 2008, and new legislation has helped prevent worst-case scenarios. The housing market resembles the early 1980s when home prices boomed before aggressive interest rate hikes caused a downturn, but prices remained stable. Demographics, with millennials entering the prime homebuying age, could support sales activity and help retain momentum. However, the economists caution that higher mortgage rates may cause near-term pain, but as inflation fades and the Fed cuts rates, housing affordability should improve, leading to a more stable market.