CRER Research Scholar featured in an article in the Chattanooga Times Free Press’s Edge Magizine: “The broad trend here, says University of Tennessee at Chattanooga economist Bento Lobo, is that rates are currently higher than they have been in a long time, and are predicted to stay that way for a while. But while they’re not the best we’ve ever seen, they’re not the worst either.
‘From 2020 through 2022, we witnessed a bidding war,’ says Lobo, the head of finance and economics in the Gary W. Rollins College of Business at UTC. ‘Buyers were competing over a smaller supply, which drove prices up.
‘But as interest rates have gone up, two things have happened: the supply side has been affected because homeowners are sitting on lower rates and are apprehensive to move; but also, new buyers are holding off because higher rates mean higher monthly payments.’
And while the current rate that’s hovering at 6% or 7% seems high, historically speaking, we’re somewhere in the middle of all-time highs and lows, he says. During the 1980s, 30-year mortgages were in excess of 18%. The lowest was 2.6% early in 2021.
Lobo also highlights the challenges faced by renters in the housing market. Increased interest rates and housing costs have led to a rise in rental rates, sometimes matching or exceeding the cost of mortgage payments.
‘If you’re not an existing homeowner, mortgage rates are high and the cost of homes are high too, so people rent,’ he says.”
Leave a Reply