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The Fed’s interest rate hike will make the housing crisis even worse

6 0 12
28.07.2022

The Federal Reserve recently announced a 0.75% increase in its benchmark interest rate, which is about to make an already bad housing situation worse.

According to experts, the rate increase will lead to higher interest rates on fixed-term and adjustable-rate mortgages, affecting the ability of would-be homebuyers to pursue them while also leading homebuilders to tamp down production of new homes. The overall cost of housing could come down, but with less supply and increasingly common all-cash buyers, more people will be pushed out of the housing market.

“We are not bullish that increases to the federal fund rate will counteract rapidly deteriorating affordability, access to homeownership, and the fundamental shortage of homes that the nation is facing,” says Mike Kingsella, CEO of the nonprofit advocacy group Up For Growth.

The housing supply is already far below demand. A recent report from Up For Growth finds that there is a nearly 4-million-home shortfall in annual housing production. That figure represents the mismatch of supply and demand from 2019, the most recent year for which........

© Fast Company


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