All articles tagged with #housing recession
U.S. Treasury Secretary Scott Bessent suggests that high interest rates have caused parts of the economy, especially housing, to enter recession, with low-end consumers hit hardest; he advocates for faster Federal Reserve rate cuts to stimulate growth, amid debates on the appropriate monetary policy stance.
Bank of America analysts believe that the current housing market is more reminiscent of the 1980s rather than the crash experienced in 2008. They argue that there is no evidence of overdevelopment or over-leveraging, and the market is primarily dealing with the fallout from tight monetary policy. However, they caution that there is still a rough road ahead for housing, with limited inventory, high prices, and labor shortages posing challenges. Affordability remains a problem, and the analysts suggest that a cut in rates is needed to improve the housing market's stability and health.
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.