U.S. Markets open in 4 hrs 31 mins
  • S&P Futures

    4,408.00
    +59.00 (+1.36%)
     
  • Dow Futures

    34,523.00
    +338.00 (+0.99%)
     
  • Nasdaq Futures

    14,379.25
    +238.50 (+1.69%)
     
  • Russell 2000 Futures

    2,028.90
    +27.60 (+1.38%)
     
  • Crude Oil

    85.99
    +0.39 (+0.46%)
     
  • Gold

    1,847.50
    -5.00 (-0.27%)
     
  • Silver

    23.94
    +0.04 (+0.18%)
     
  • EUR/USD

    1.1291
    -0.0015 (-0.1355%)
     
  • 10-Yr Bond

    1.7830
    0.0000 (0.00%)
     
  • Vix

    28.73
    -0.12 (-0.42%)
     
  • GBP/USD

    1.3506
    +0.0000 (+0.0013%)
     
  • USD/JPY

    114.1240
    +0.2580 (+0.2266%)
     
  • BTC-USD

    37,699.82
    +1,228.82 (+3.37%)
     
  • CMC Crypto 200

    860.49
    +49.88 (+6.15%)
     
  • FTSE 100

    7,493.02
    +121.56 (+1.65%)
     
  • Nikkei 225

    27,011.33
    -120.01 (-0.44%)
     
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Housing: 'We're in for a slowdown' when mortgage rates start to rise, Redfin chief economist says

In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • RMAX
  • OPEN
  • Z
  • ZG
  • CCS
  • RKT

Daryl Fairweather, Redfin chief economist, joins Yahoo Finance Live to discuss where financial pressures and rising mortgage rates may be projected to occur in the housing market.

Video Transcript

[MUSIC PLAYING]

AKIKO FUJITA: Well existing home sales rose 0.8% last month from September. That is the highest pace we've seen since January. And existing home sales are now on track to pass six million this year. That would mark the strongest annual rate in 15 years. Let's bring in Redfin chief economist Daryl Fairweather joining us today. Talk to me through what you're seeing right now out of the markets. I mean, I sort of tease this segment as a, could a potential slowdown be coming? But here we are talking about this year being the fastest pace in 15 years.

DARYL FAIRWEATHER: Demand for homes is actually at a high for what we see at Redfin, since at least 2017. That's how long we've been tracking our own internal demand and how that relates to the housing market. So right now, the housing market is really strong. I do think we're in for a slowdown later next year, especially as mortgage rates start to rise. But that's a big if and when mortgage rates do start to rise.

ZACK GUZMAN: I mean, obviously that's the big question here. And when we look at, I guess, what that's going to do, it could matter depending on the jurisdiction, the locality you're in. Because we've seen a lot of people moving out of California, as you guys kind of note in your report. And we've seen a lot of different areas that maybe had not been looked at as a place people wanted to live seeing prices really shoot up in the pandemic. I mean, when you look to next year, how do you see that shaping up in terms of the mortgage rates impacting prices in different regions?

DARYL FAIRWEATHER: The pandemic completely changed the landscape for migration. People have been moving to places they wouldn't have considered before the pandemic because of remote work. And now, home prices are significantly up from before the pandemic in places like Austin, Phoenix, Miami. Those places are already really expensive. So I expect next year some of the places that didn't see as much attention this last year get more attention, maybe some more northern cities, or some smaller cities like San Antonio or Tucson.

AKIKO FUJITA: So the question every potential homeowner wants to know is, when is actually the right time to get in? Obviously, while prices have been high to your point, mortgage rates have been low. That's sort of been fueling the demand. As we see those rates creep up, what do you think is the good entry point for those who are especially first-time homebuyers?

DARYL FAIRWEATHER: I think it would be a good idea to take advantage of low mortgage rates while they're still low. Once they start to increase, that's going to add to your monthly housing cost regardless of how much home prices go up or down. I expect home prices to grow slowly next year, actually slower than the pace of inflation, which means that the real value of your home could actually decline because everything else is getting so much more expensive. So I don't think it would be the biggest deal if you have to wait until the end of next year because I don't think we're going to see a lot of price appreciation between now and then. But getting that low mortgage rate could really make the difference.

ZACK GUZMAN: Yeah, I mean my parents right now are going through trying to find mortgage rates. And 3% seems pretty spot on. Your forecasting, 3.6% next year. And even though we're talking about price appreciation is really booming in the pandemic when we saw housing prices shoot up doesn't necessarily mean you need to have a collapse back down to Earth like what we saw in the housing crisis back in '08. I mean, how hard is that maybe for some people to realize? Because it seems like there is still a bit of fear from people who haven't bought yet that that could happen.

DARYL FAIRWEATHER: There are so many people who want to buy homes and not enough homes for them. The construction industry has not been able to keep pace with demand. So even as some people get priced out of buying homes, there are plenty of people just waiting to move up in line so that they can buy a home. And millennials are the biggest generation. We are entering into home buying age. So there's going to continue to be more and more people in that line to buy a home.

So I don't see home prices collapsing. They may slow down. But there won't be a collapse.

AKIKO FUJITA: Daryl Fairweather, Redfin chief economist. Appreciate you joining us today.