Updated about 11 hours ago on . Most recent reply
Mortgage Demand Is Down, Rate Cuts Won't Cut It
The Mortgage Application Index is now 34% below pre-pandemic levels and a staggering 55% below the 2021 peak. Even with last year’s rate cuts, (and more expected soon), demand hasn’t rebounded. In fact, we’re sitting lower than during the 2008–2012 crash.
Reality check: rates aren’t the problem. To paraphrase James Carville, It's the prices, stupid.
Buyers aren’t staying out of the market because of financing costs alone. They’re staying out because home prices remain historically unaffordable. Until prices adjust downward, I'm thinking 25%, demand is going to remain suppressed no matter how many times the Fed cuts rates. And if the Fed does cut rates, sellers will see this as an excuse to raise prices from already unaffordable levels. Damned if we do, damned if we don't.
So the real question becomes:
Will sellers finally blink and bring prices down, or will we stay stuck in this standoff?
And for investors, is this the calm before the storm of opportunities?
What do you think: Are we heading toward a long freeze in housing, or is the market about to break loose?