Low mortgage rates keep owners in their houses longer

For the longest time in at least 25 years, homeowners have been standing still. Reports show the lack of movement is keeping the housing market stagnant.

Questions have been raised over how this affects things other than the housing market, such as the economy, jobs, and salaries.

Mark Stapp, Director of Master’s in Real Estate Development at the W. P. Carey School of Business at ASU, joined “Arizona Horizon” to discuss how low mortgage rates affect the economy.

“For some people, aging in place means that it’s easier for them to make that transition in their life, and for many of them it’s cheaper,” Stapp said, “…cheaper because they’ve paid their mortgage off, or they have a mortgage…low interest rate on it, and so the alternative is more expensive.”

Stapp emphasized that mobility is necessary in the marketplace to allow others moving for a job to find somewhere to live, or allowing those to move from one type of housing to another type of housing.

“When it starts to lock up,” Stapp explained, “…you lose that mobility…that causes problems, and a lack of supply. So lack of available supply, that means the prices get pushed up…the trade off of selling and moving gets even more difficult for you.”

According to Stapp, he believes that mortgage interest rates need to be around 5% to “really loosen this whole thing up.”

“Wages have to rise in line with the rising price of homes,” Stapp said, “…homes continue to rise, and just rising at a slower pace than they were, but they’re not going down.”

After discussing the current stagnation in the market, Stapp explained that he thinks this could remain for the next five to ten years.

“We are doing things that are making labor much more expensive, and much more difficult,” Stapp said, “…construction prices, tariffs…don’t help. Pricing is eased a little bit, but not enough…land and finding the available land that’s cheap enough.”