DoubleLine "Lower mortgage rates could actually soften home prices."

The Rate Paradox and Magic Number

GoldFix 3 Bullet Summary

DoubleLine believes it is unwise to bet on housing prices going up as mortgage rates come down next year.

• Just as lower rates did not mean higher prices in the crisis of 2008-2011 when 5 million homes were available; Higher rates did not mean lower prices due to the lack of supply post Covid

• Among other reasons for current higher prices despite higher mortgages were Low rate “lock-ins” forcing many people to stay put.

• There is a “magic number” (mortgage rate) that will unlock these homes, and consequently lower mortgage rates may actually serve to counter-intuitively weaken housing prices.

Comment: as one GoldFix founder noted last year if that “magic number” hits hard, you will see even more asymmetric relocations from Northern affluent urban areas to suburban/exurb/Southern locations.