The LA Times recently spoke with Fannie Mae’s Chief Economist, Douglas A. Duncan, to get his insight and views on the US housing market. The article titled Five Key Takeaways on America’s Housing Market details five key takeaways from Duncan. Here’s what you need to know:
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As the article states, “housing isn’t really going gangbusters.” In other words, while the housing market did grow significantly this year, it was recovering from a very low time. LA Times says that Duncan believes that “real estate is also not likely to be the same economic drive it once was.”
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Fortunately, mortgage rate increases will not affect the recovery, according to Duncan. Fannie Mae discovered the lack of correlation between mortgage rates and home prices in a recent study. Duncan tells the LA Times, “I don’t think that the rate rises will be as sudden as the first piece we saw.” The Agency’s Mauricio Umansky also discussed the negligible effect rising mortgage rates have on the economy at an investment roundtable in July.
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Duncan also discusses the rental market versus homeownership. While renting has become perfectly acceptable especially since home losses were on the rise, it is always best to own. Duncan says that former homeowners often rent investor-remodeled properties that emulate a purchased home. Fortunately, Duncan believes that former homeowners will eventually own again, even if it takes a while to get there.
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The home-buying road is the best to take, but only if you can afford it, says Duncan. Prices are good. Interest rates are good, even with the spikes.
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The article poses the question: “Will new home construction increase supply, just as big investors decide it’s time to sell their holdings?” Duncan says that this could result in a downturn. Duncan says, “If I were them, I would have a close eye on what’s actually happening in construction, because that is going to be one form of competition,” (via LA Times).”
Read the full story here.
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