The fate of the housing boom is on the minds of both homeowners and homebuyers these days. Will record home values lead to a crash reminiscent of the one that made the Great Recession so painful? Or will prices simply take a breather from their torrid pace of appreciation?
No one knows — not even the world’s most powerful central banker. During the news conference following last week’s meeting of the Federal Reserve Open Markets Committee, Fed Chairman Jerome Powell acknowledged a sharp rise in mortgage rates. They’ve gone from 3 percent in August 2021 to 6 percent now, according to Bankrate’s national survey of lenders.
“We’re well aware that mortgage rates have moved up a lot, and you’re seeing a changing housing market,” Powell said in response to a question from Mark Hamrick, Bankrate’s senior economic analyst. “We’re watching it to see what will happen. How much will it really affect residential investment? Not really sure. How much will it affect housing prices? Not really sure. We’re watching that quite carefully.”
