Lack of affordability has pushed the share of first-time buyers to a 13-year low
For example, the COVID-19 downturn lasted just a few months, but job losses were steep, with unemployment peaking at 14.7%. Conversely, the Great Recession started in December 2007 and lasted until June 2010, and unemployment topped out at 10%.
Still, most economists predict that as people spend down their excess pandemic savings and incomes adjusted for inflation turn negative, consumers will be forced to tighten their purse strings and economic activity will peter out.Existing-home sales in May fell by 3.4% from April to a seasonally adjusted annual rate of 5.41 million. Sales were down 8.
Unfortunately, the period between now and when prices fall, will keep first-time buyers on the sidelines. The lack of affordability has pushed the share of first-time buyers to a 13-year low. Unfortunately, these frustrated house hunters will have to wait it out until either prices come down or rates retreat, or ideally, a combination of the two.It is possible, if not likely, that economic activity will slow down before we see a meaningful drop in prices.
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