The housing market is dealing with a number of “tricky” dynamics, according to Tracy Kasper, the president of the National Association of Realtors.
“What we’ve experienced over the last probably 12 to 18 months is what I really like to call a leveling,” Kasper said Thursday during CNBC’s Financial Advisor Summit.
That slowdown in home sales comes after “exponential increases year over year” during the coronavirus pandemic, Kasper said.
With fewer people selling their houses, she said, there is now an “inventory crisis.”
“We’ve seen a crunch; our first-time homebuyers are struggling,” she added.
First-time homebuyers woes
During the pandemic, first-time homebuyers found it hard to compete with other buyers who had more cash to spare, Kasper said.
Now, they simply can’t find anything as current homeowners are reluctant to put their house on the market and give up existing low-rate mortgage.
Mortgage rates are currently approaching 8%, the highest level in decades and have priced many first-time homebuyers out of the market, Kasper said.
Higher rates add to monthly payments, which can mean it’s harder to qualify for a mortgage. Last year, lenders denied loan applications due to “insufficient income” more often than any other point since records began in 2018, according to a new report from the Consumer Financial Protection Bureau.
“In most cases, income did not increase at the pace of average mortgage payments,” certified financial planner Barry Glassman, founder and president of Glassman Wealth Services in McLean, Virginia, recently told CNBC.
Glassman is also a member of CNBC’s FA Council.
Given these obstacles, Kasper said real estate insiders are desperately seeking ways to increase inventory, including pushing for government incentives like tax breaks for sellers.
“We’re looking for any conversation that we can have, that would open up that inventory,” Kasper said.
Housing and banking groups also sent a letter to the Federal Reserve this month, strongly encouraging the central bank to not contemplate further rate hikes.