The present housing market is exceedingly costly, and Andy Walden, Vice President of Enterprise Research at ICE, explained in a recent interview with CNBC that it would take one of three extreme scenarios to restore affordability to pre-pandemic levels.

Among these hypothetical scenarios, one would involve a significant surge in U.S. incomes, Markets Insider reported.

“If you look at home affordability itself, and what it would take to normalize the market today, it’s a 35% correction in price, or a 4% decline in rates, or a 55% growth in income,” Walden said. “Some combination of those. Those are massive movements we’re talking about, and none of them are going to happen in a vacuum, and none of those one single factors are going to make the move.”

He mentioned that there is substantial potential for market fluctuations, but the limited availability of housing inventory is preventing prices from decreasing as they typically would with the increase in interest rates.

Walden further noted that the most recent housing data showed a strong market in August, despite buying power being down by approximately 6%.

Written by staff