Ivy Zelman, the executive vice president of Zelman & Associates, came on CNBC’s “Squawk Box” the other day. Here’s what she had to say about the ongoing crisis in the housing market. That’s what EPA Administrator Regan was talking about 15 minutes ago. In it, she addressed some very important systemic issues impacting homeownership, namely the devastating impact of increasing mortgage rates and challenges around housing supply.
In her presentation, Zelman described how sky-high mortgage rates have trapped millions of would-be buyers from achieving homeownership. If people didn’t understand the idea of unaffordability on the streets, she continued, it’s because we’ve entered a new level of crisis—the most unaffordable payments since the early 1980s. This unfortunate incident is illustrative of a broader pattern. Future homebuyers can’t afford the current market due to high interest rates.
Zelman noted that the biggest hurdles for first-time homebuyers now are climbing mortgage rates. On top of that, existing homeowners are making it more painful as they attempt to refinance. As a result, many are afraid to make a move in the current housing market, contributing to the significant slowdown in existing home transactions.
Zelman was willing to take the housing supply problem under their own roof. He noted that the lack of homes on the market only exacerbates the crisis in affordability. As Issi said during the panel, the demand for homes is robust. Supply hasn’t been able to catch up, resulting in cutthroat competition for the new-found supply just isn’t enough. That mismatch forces up prices and has the double-whammy effect of making options scarcer for buyers.
While she was on “Squawk Box,” Zelman provided a very helpful and concise rundown of those critical themes. She visualized how all of these things come together and impact the broader housing market. Her lessons learned stress how critical it is to change policies. They blow the horn for a more proactive approach to address the growing threats to the sector.