Inflation is not only cramping Americans' food and energy budgets, but it's taking a bite out of the housing market. The combination of high interest rates and high prices continues to stifle the residential real estate market. The latest data shows mortgage applications have dropped for three straight weeks, while the average rate on a 30-year fixed mortgage has risen to 6.82%, up more than a half-percent from a year ago. At the same time, the average home price in the U.S. is at a record high. "Taking into account mortgage rates, incomes, and house prices, affordability right now is strained at the worst levels in about four decades," says Lance Lambert, CEO of the real estate analytics firm ResiClub, in a recent interview with Fox Business.
With limited supply keeping prices elevated and the Federal Reserve keeping interest rates high to counter inflation, the market is caught in the perfect storm for buyers and sellers. "A lot of home buyers can't get in, and a lot of home sellers can't sell and buy something else because they can't afford those new monthly payments," says Lambert.
Faced with this latest economic challenge in an election year, the Biden administration is doing what it does best: blaming someone else. The same administration that tried to blame high gas prices on greedy gas station owners, and high food prices on 'price-gouging' corporations, is now blaming high home prices on...you guessed it...greedy real estate agents. "They're scapegoating," says Lambert. "They act like lowering commissions would improve housing affordability...you know, going after soccer moms making $60,000 a year, because that's the only job that works around their kids' schedule."
Rather than attacking realtors, the administration should be implementing policies to increase housing supply and reduce inflation, according to Lambert. "Putting in tax policy that works for new construction and not against new construction, lower fees on homebuilding, all the boring stuff that would increase supply in the long-term...that is what would improve housing affordability," he says.