Mauricio Umansky, celebrity real estate broker and founder of The Agency, is raising concerns about a looming “perfect storm of total unaffordability” in the real estate market.
This comes in response to the 30-year fixed mortgage rate reaching its peak since early December, indicating a challenging situation for the housing market, Fox Business reports.
“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 during his appearance on “The Claman Countdown”.
Umansky noted that we shouldn’t anticipate a decrease in prices until we begin “seeing some pain and some supply.”
“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,” he said.
Umansky attributed the shortage of housing inventory to several factors: a reduction in home construction, homeowners unwilling to sell or buy because of their current mortgage rates, and hedge funds purchasing single-family homes.
In December, Democrats introduced the End Hedge Fund Control of American Homes Act. The bill “imposes an excise tax on hedge fund taxpayers that own a certain number of single-family residence[s] in excess of a specified amount.” It also “establishes the Housing Down Payment Trust Fund into which tax revenues from this bill shall be deposited to provide grants for down payment assistance to taxpayers purchasing a single-family residence.”
Although Umansky supports free-market capitalism, he believes that government action might be needed to address the issue of Wall Street investors aggressively purchasing 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 stressed.
