Moody’s Analytics Chief Economist Mark Zandi predicts that the latest Federal Reserve interest rate hike will cause a housing correction across the United States – but there won’t be a housing crash. Zandi says the market likely won’t crash but the fundamentals remain strong: Vacancy rates are at an all-time low, mortgage underwriting quality is high, and most loans are “plain vanilla” 30-year or 15-year fixed-rate products. There’s no sign of subprime or negative amortization activity that precipitated the foreclosure crisis during the Great Recession.“ I just don’t see the kind of mortgage defaults and distressed sales that would be necessary for big declines in housing values,” Zandi says. “That’s when you get crashes, when you have lots of foreclosures and a lot of distressed sales. That’s just not going to happen.”
Source: Bloomberg CityLab (06/23/22) Capps, Kriston© Copyright 2022 INFORMATION INC., Bethesda, MD (301) 215-4688
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