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Fannie Mae Downgrades Housing, Origination Forecast
Posted on 6/2/22 at 7:35 am
Posted on 6/2/22 at 7:35 am
quote:
In their latest forecast, Fannie Mae’s Economic and Strategic Group (ESR) has downgraded its GDP projections along with home sales and mortgage originations due to the current state of the economy.
Fannie Mae now predicts that real GDP growth measured on a fourth-quarter basis will be 1.3%, down from 2.1% predicted at the beginning of the year.
Further, they also downgraded their predictions on the housing market for calendar years 2022 and 2023 by 3.7% to 6.1 million units and 4.5% to 5.4 million units, respectively. Mortgage originations outlooks were downgraded as well, as they now expect 2022 origination activity to total $2.70 trillion and 2023 originations to total $2.25 trillion, down from the respective $2.82 and $2.41 trillion they had previously projected.
Rising interest rates and inflation are on the forefront of economists' minds, and the ESR no longer believes that recent and future moves by the Federal Reserve to curtail inflation by tightening monetary policy will result in a “soft landing” as they are still predicting a slide into a recession during the second half of next year.
quote:
"Rising mortgage rates are reducing affordability through higher mortgage-related costs, all while house prices continue to grow. Historically, rapid and substantial rises in mortgage rates have had the effect of slowing activity, which we reflect in our forecast. Not only is the worsening affordability of homes a problem for potential entry-level homebuyers, but current homeowners are less likely to trade in their existing lower-rate mortgages and list their homes for sale, both of which will likely weigh on sales."
LINK
The dream of homeownership for many young people is drying up if you read that last statement and also many people will stay put as rates rise and choose to remodel instead of sell and upgrade. The same thing happened in '08 when the RE market crashed. People stayed put and remodeled.
Also, if you are paying attention you will see there has been a steady increase in new construction houses just sitting on the market signaling a slow down is underway. It's a matter of time before price corrections follow especially as rates will have to keep going up as inflation shows no signs of slowing down.
Posted on 6/2/22 at 7:40 am to stout
quote:
The dream of homeownership for many young people is drying up
Quit trying to live in trendy areas.
Posted on 6/2/22 at 8:09 am to stout
quote:
current homeowners are less likely to trade in their existing lower-rate mortgages
You don't say!!!!
Posted on 6/2/22 at 8:31 am to stout
Saw a place sell for $1.2m last month. 4,635 sf TL.
Posted on 6/2/22 at 8:38 am to stout
2x4x8 southern yellow pine stud dropped by 50 cents this week.
Posted on 6/2/22 at 8:42 am to stout
The analysts/planners at our company believe that we will be fine because our customers are not as price sensitive as other groups. Translation, our shite is incredibly expensive and the people who buy it don't even think about economic downturns.
If I can keep a job and there are some price drops on houses this may be best case scenario for me.
If I can keep a job and there are some price drops on houses this may be best case scenario for me.
Posted on 6/2/22 at 8:44 am to stout
quote:
The dream of homeownership for many young people is drying up
I hate this phrase.
It means that many will have to “settle” for a smaller starter home versus a McMansion.
My only concern is that the Fed is not raising interest rates enough and this economic mess will drag on longer. They are also doing nothing to address our national deficit.
Posted on 6/2/22 at 8:56 am to stout
Two big home builder groups in this area are clearcutting every bit of land they can get their hands on building these 500k poorly built massive boxes of houses. Older homes are going for nearly twice what they were five years ago. Every new sale is contingent in a week, usually with double digit bids.
This many millennials didn't just crawl out of their parent's basement with half a mil to dump on a new house. This thing is being driven and it's going to crash...which has a lot in common with enough other economic factors moving in the same direction that it can't help but feel intentional.
This many millennials didn't just crawl out of their parent's basement with half a mil to dump on a new house. This thing is being driven and it's going to crash...which has a lot in common with enough other economic factors moving in the same direction that it can't help but feel intentional.
This post was edited on 6/2/22 at 8:57 am
Posted on 6/2/22 at 8:57 am to stout
Fannie is trying to put pressure on the Fed to slow down. JP Morgan's CEO had a similar message yesterday.
Posted on 6/2/22 at 9:05 am to stout
The tiny house market may start to pick up.
Posted on 6/2/22 at 9:21 am to stout
Foreclosures will come at some point. Even with low interest rates if a recession hits and people lose their jobs, many don’t have the resources to last long because they over extended in their house.
I am waiting for that worm to turn. Foreclosure or deals to get them out of the investment asap.
I am waiting for that worm to turn. Foreclosure or deals to get them out of the investment asap.
This post was edited on 6/2/22 at 9:22 am
Posted on 6/2/22 at 9:44 am to stout
We’re still several years away from adequate inventory. Prices are going to simply stabilize, not go down.
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