Meredith Whitney, CEO of Meredith Whitney Advisory Group, joins Market Domination Overtime to analyze the overall state of the housing market (XLRE) as mortgage rates continue to fall.
“I don’t think rates are low enough to really move the market. I think they need to drop another 100 basis points to really spark interest. And it’s a two-step process to bring prices down. I We estimate that at least 15% could make even the cost of carrying a mortgage into an acceptable range,” Whitney told Yahoo Finance.
She points out that mortgage carrying costs have doubled in the past four years to 40%, which is why many buyers remain on the sidelines. While interest rate relief will allow buyers to enter the market more affordably, she believes the bigger problem remains with home prices, which can only be solved by increasing inventory. Once that part of the equation is resolved, the market will finally find some relief.
Whitney also emphasized the “silver tsunami” effect, where housing begins to shrink as the population ages. She explains that more than 60% of homes are owned by people over 50 years old. “So there’s a big problem in that all the housing stock is owned by older people, and it’s harder for young people to move in.” But property taxes and homeowners insurance are “It’s become more and more expensive for these seniors to live in their own homes because of the dramatic increase,” she said, pointing to a “real strain” on the system.
For more expert insights and the latest market trends, click here to watch the full episode of Market Domination Overtime.
This post was written by Melanie Leal
