Redfin’s Daryl Fairweather breaks down the housing conundrum

Real estate economist talks mortgage rates, rental market on TRD’s podcast “Deconstruct”

podcast, housing, mortgage rates, fed
Redfin's Daryl Fairweather (Redfin)

When the Federal Reserve slashed interest rates early in the pandemic, it was the opportunity of a lifetime for some homebuyers who could suddenly score cheap financing. But that shift coincided with a dramatic spike in unemployment, the likes of which had not been seen in decades.

“[The] only people who were in a financial position to take advantage of those record low mortgage rates are people who had a steady job,” said Redfin’s chief economist, Daryl Fairweather.

Two years later, unemployment is back to historic lows, but prospective buyers are encountering a housing market in which interest rates are spiking again and prices remain stubbornly high across the country.

“Maybe they were laid off from their job or they lost some income, those people weren’t getting the loans during the pandemic,” Fairweather said. “Now they’re just getting back on their feet ready to buy a home, but are hit with 7 percent mortgage rates.”

In the latest episode of TRD’s weekly podcast “Deconstruct,” Fairweather discussed the impact of the rate shifts on first-time homebuyers and why a slowdown in sales activity has not coincided with a decline in prices.

The short answer is that few people are listing their homes right now, she said. Those who were able to lock in low mortgage rates over the last two years have little incentive to move. If they did, an identical home would cost a lot more.

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“They’re just better off staying put and keeping their mortgage rate than moving and trying to buy something else,” Fairweather said.

Fairweather also discussed why home flipping has become more difficult and why first-time buyers might be pulling back from fixer-uppers — a subsect of the market that has been particularly popular during the pandemic.

When will mortgage rates start to come down? Will home prices ever start to drop? Will rents plateau or keep rising?

Get Fairweather’s take on all of this and more in the latest episode of “Deconstruct,” now streaming on Apple Podcasts, Spotify and wherever else you get your podcast fix.