Celebrity real estate agent Mauricio Umansky this week sounded the alarm over a "perfect storm of total unaffordability" that he said is brewing in the U.S. housing market.
During an appearance on "The Claman Countdown," Umansky, founder and CEO of The Agency, cited the rising rate for the 30-year fixed mortgage and the lack of supply in the housing market as some of the factors creating a "perfect storm" of unaffordability.
"We've got super high interest rates above 7%. Mortgage applications are as low as they've been since 1995. And then we've got no supply," he said. "Until we start seeing the pain and prices drop, I don't see the government dropping interest rates. So, we really need to allow the markets to be markets, and for affordability to start happening so that the government starts dropping interest rates again."
What Causes the Lack of Inventory?
When asked about the reasons behind the lack of supply in the housing market, Umansky cited buyers refusing to move due to their existing home mortgage. This is in line with a recent finding published by Redfin that showed homeowners in the U.S. staying in their homes for 11.9 years, twice as long as they used to. The driving force behind that shift are baby boomers, the analysis found.
In addition, Umansky also cited hedge funds buying single-family homes as one of the reasons for the lack of supply. He later noted that the government would likely need to get involved to put a pause on Wall Street investors going on a buying spree for single-family homes.
"The government does have to get involved a little bit and perhaps, you know, figure out some way of limiting the way that the hedge funds are able to do this, because right now in Middle America, they [hedge funds] are just eating up so much product that there's just no supply hitting the market," he said.
Umansky's statement came days after Credit Summit CEO Carter Seuthe predicted middle-class earners would no longer be able to afford homeownership and real estate by five years due to soaring mortgage rates and home prices. As of Thursday, the interest rate for the 30-year mortgage was 6.9%, while the rate for the 15-year mortgage rose to 6.29%, per Freddie Mac.
READ MORE: Middle-Class Earners Won't Be Able To Afford Homeownership in 5 Years: Experts
