First-time homebuyers 'getting squeezed the most’ between inflation, higher mortgage rates: Real estate expert
Mortgage rates dropped slightly for first time in weeks while inflation hits 40-year highs
Real estate expert reveals who is 'getting squeezed the most’ due to economic landscape
Macro Trends Advisors LLC founding partner Mitch Roschelle argues higher mortgage rates have 'cooled off the housing market a bit' and says he hopes a 'slowdown in year-over-year price gains' will happen, noting higher rates will 'offset that.'
Macro Trends Advisors LLC founding partner Mitch Roschelle argued on Tuesday that first-time homebuyers, who he deemed "important" to the American dream, are "the ones getting squeezed the most between inflation and higher mortgage rates."
Mortgage rates dropped for the first time in seven weeks, according to latest data from Freddie Mac, with the 30-year fixed-rate mortgage falling to 5.1% annual percentage rate (APR) as of April 28. Though the rates edged down slightly, they remain significantly higher compared to the same time last year when the APR was 2.98%.
The real estate expert argued on "Mornings with Maria" Tuesday that higher mortgage rates have "cooled off the housing market a bit" and said he hopes a "slowdown in year-over-year price gains" will happen, but noted the higher rates will offset that.
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Roschelle’s appearance on FOX Business comes as inflation accelerated to a new four-decade high in March and price hikes were widespread with shelter costs increasing 5% year-over-year and jumping 0.6% for the month.
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Last month, the Labor Department said that the consumer price index (CPI) – which measures a bevy of goods including gasoline, health care, groceries and rents – rose 8.5% in March from a year ago, the fastest pace since December 1981, when inflation hit 8.9%. Prices jumped 1.2% in the one-month period from February, the largest month-to-month jump since 2005.
The inflation data for April will be released next week.
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"I would bifurcate the housing market between those who are cash buyers and those who are borrowing money," Roschelle told host Maria Bartiromo.
"Those who are borrowing money, which are ostensibly the first-time homebuyers, they were getting squeezed on price gains, year-over-year price gains, and I’m hoping that what we see is a slowdown in year-over-year price gains and the higher mortgage rates will sort of offset that a little bit."
He subsequently told Bartiromo that he does not predict the prices of housing to fall, arguing "we still have a massive supply and demand imbalance." Roschelle explained that there is an outsized demand for homes and a "very limited" supply.
The inventory of unsold existing homes increased to 950,000 as of the end of March, which would support two months at the monthly sales pace, according to the National Association of Realtors. (AP Photo/John Bazemore, File / AP Newsroom)
According to information provided by the National Association of Realtors (NAR) late last month, existing-home sales fell for the second straight month in March to a seasonally adjusted annual rate of 5.77 million. The association also noted that sales were down 2.7% from the month prior and 4.5% from the same time last year.
With slower demand, the inventory of unsold existing homes increased to 950,000 as of the end of March, which would support two months at the monthly sales pace, according to NAR.
Roschelle pointed to that data on Tuesday - specifically the limited supply - and said he doesn’t believe the U.S. is in a housing bubble.
"Anybody who is predicting that there is a housing bubble, the last time we had a housing bubble there was 14 months of supply of housing on the market — so I don’t see a bubble, but I do concern myself with first-time homebuyers because they are important to the American dream and they are the ones getting squeezed the most between inflation and higher mortgage rates," Roschelle stressed.
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The median existing-home sales price rose to $375,300 in March, up 15% from the same time last year, according to NAR.
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Roschelle also pointed out some "good news" as it pertains to the housing market, noting that "we are entering the all-important home sale season and we’re starting to see a bigger and bigger supply of homes hitting the market."
"I think a lot of people were holding back putting their houses on the market thinking, ‘Wait, I’m not going to do it this year because the price is going to go up and I will get more next year,’" he continued.
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"Now there’s fear amongst home sellers that prices could fall, so they are starting to put their homes on the market."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| LOW | LOWE'S COMPANIES INC. | 228.79 | -0.07 | -0.03% |
| HD | THE HOME DEPOT INC. | 332.75 | +0.07 | +0.02% |
Roschelle told Bartiromo that he does not see house prices falling, but said, "if they stay where they are and more people can get into homes, I think that’s a really good thing for the economy."
"…When you buy a home, the first thing you do is you run out to Lowe's or to Home Depot and start doing things to fix it up, and that’s what really drives the economy," he concluded.