Rapidly deteriorating affordability in this cycle has already caused significant decreases in housing activity, specifically existing home sales, but has left national home prices more or less unscathed. Homeowners have not experienced the decline in affordability…They have locked in low, fixed-rate mortgages for 30 years that have simply disincentivized them from listing their homes for sale.
In finance, the term 'strong hands' refers to investors or market participants who have the financial capacity and confidence to hold onto an asset for a long period, even during periods of market volatility or downturns.
Among U.S. homeowners who have a mortgage, 96% have a fixed-rate mortgage. 76% have an interest rate below 5.0%. Because homeowners are this cycle's 'strong hands,' there will be a lack of homeowner distress and few distressed sales.
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