Latest news with #housingExperts
CNET
30-06-2025
- Business
- CNET
Do Mortgage Rates Drop in a Recession? This Realtor Has a Hot Take
Mortgage rates have typically fallen during recessionary today's news cycle, recession headlines come and go. Amid trade war anxieties, stock market roller-coaster rides and global conflict, no one is hoping for a major economic setback -- except recessions have often created more favorable conditions for mortgage rates. Since the beginning of 2025, average 30-year fixed mortgage rates have been stuck in the high 6.5% to 7% range. Most housing experts, myself included, aren't expecting rates to move much lower by the end of 2025. What would cause mortgage rates to drop? Could buying a home become more affordable in a recession? Would a dramatic shock to the economy send rates down below 3%, as we saw during the pandemic? Not necessarily. Having navigated the real estate market for over two decades, I've witnessed its highs and lows, including the 2008 seismic crash. When my clients are financially ready to buy a home, I tell them that the market is just one piece of the puzzle. There's always an opportunity for certain homebuyers, and the current economic landscape could actually tip the scales in your favor. Let's explore what a recession could mean for mortgage rates, home prices and your journey to homeownership. Do mortgage rates drop in a recession? During an economic downturn, mortgage rates tend to decrease for a few reasons. Market uncertainty can cause investors to seek the stability of government bonds, driving up bond prices and consequently lowering their yields (which are tied to interest rates). Recessions also typically lead to less consumer spending and more job losses, which in turn reduces demand for mortgage loans. This decreased demand can cause lenders to reduce rates. Moreover, the Federal Reserve usually cuts its short-term interest rate during recessionary periods. Lower borrowing rates can help stimulate the economy by encouraging more households to spend and take out loans. Mortgage rates did drop in recent economic depressions, both in 2020 and 2008. But things are messier this time around. There's political volatility and economic uncertainty everywhere, and the Trump administration's policies are changing daily. Even though rates could see some dips, they might also shoot back up. If you're holding out for 4% or 5% mortgage rates, you'll be waiting longer than you'd like. It's going to take far more negative economic news to see rates fall in a big way. Are we currently in a recession? There have been plenty of recession warning signs over the last couple of months. Layoffs are picking up, consumer confidence has dipped, paychecks aren't going as far and retirement accounts are taking hits. While less disposable income and tighter budgets point to a general slowdown in the economy, technically, we're not in a recession. It generally takes two consecutive quarters of negative GDP growth to hit that definition. The official declaration of a recession by the National Bureau of Economic Research usually comes after a period of economic decline has already been ongoing for several months. For a lot of folks, it already feels like we're in the middle of a downturn. Even if the inflation rate isn't going up, the cost of everyday goods and services is high, and budgets are getting hammered. When folks feel the squeeze every time they swipe a card at the grocery store, it prevents them from making huge purchases like a home or from taking on more debt. Will the Federal Reserve cut interest rates? Borrowing costs, credit and debt have been expensive for the last several years, making households and businesses wary about finances. After holding interest rates steady so far this year, the Fed is projected to cut interest rates in September, eventually making financing cheaper. But the central bank has been cautious about shifting policy, especially with tariffs driving prices back up. Rate cuts have been controversial, and the Fed is a bit stuck right now. The economy's losing steam and inflation is cooling, but not fast enough. Also, while lower interest rates will affect the housing market, the Fed doesn't directly control mortgage rates. Mortgage rates move based on many factors, such as the bond market and investor expectations. Even when the Fed starts cutting rates again, don't expect mortgage rates to drop to rock bottom. Many of those expected cuts are already priced into the market. Will home prices fall in a recession? Home prices are a big concern during a recession. Even if home prices are currently showing some signs of cooling off, inventory remains tight on a national scale and sellers still have the upper hand in a lot of regions. Plus, given high construction and labor costs, home prices won't be falling off a cliff anytime soon. Historically, home prices don't fall much during downturns. The 2008 housing crash was the exception, not the rule. What we'll probably see is slower appreciation or small dips in certain markets, especially in areas hit by higher insurance costs, taxes or natural disasters (Florida, Texas and Louisiana come to mind). Is it cheaper to buy a home during a downturn? If you're financially stable, it could be cheaper to buy a home in a recession. You might find better deals, less competition and more negotiating power. But if lending tightens, as it often does during a downturn, getting a loan could get tougher. That's something we're already starting to see with condos and certain types of properties. Don't overlook "the wealth effect." When people feel wealthier, like when their stock portfolio or home value is up, they're more confident in making big purchases. But when economic uncertainty is high, or there's even a threat of job insecurity, households pull back. That negatively affects buyer activity. If someone just lost $20,000 in their 401(k), they're not rushing to get a new mortgage. Is now a good time to buy a home? Your personal financial situation matters more than your interest rate. If you have a solid income stream, strong credit and a long-term plan for paying off a home loan, waiting for lower rates might not be worth it. The best time to buy a home is when it makes sense for you. So don't expect a "perfect time" to take out a mortgage. The green light most people are waiting for doesn't exist. If you prepare, stay informed and work with the right team, you can make a smart move no matter what the economy's doing. Read more: Here's Why You Probably Can't Afford a Home on a $100K Salary Now Playing: 6 Ways to Reduce Your Mortgage Interest Rate by 1% or More 02:31
Free Malaysia Today
29-06-2025
- Business
- Free Malaysia Today
Experts call for tax on vacant and unsold homes
More than 22,600 completed houses remained unsold for more than nine months in 2024, according to the national property information centre. PETALING JAYA : Housing experts have called for a vacancy tax to help tackle the rise of vacant and unsold homes and lower property prices by discouraging speculation. They said many 'affordable' housing units are being held empty by owners or investors, making it harder for real buyers to find homes. Research associate K Theebalakshmi said a vacancy tax can prevent speculation and push developers to build homes that meet actual needs, reducing oversupply and supporting more balanced housing development Theebalakshmi, who is with Khazanah Research Institute, said housing prices in Malaysia rose by 5.8% a year between 2010 and 2022, well above the healthy growth range of 3% to 4%. K Theebalakshmi. 'While some fear falling home prices or rents, this kind of market correction (vacancy tax) may be just what we need to make housing more fair and stable,' she told FMT. 'In highly urbanised states where vacancy and overhang rates are high, a vacancy tax would help stop people from holding on to homes for quick profit.' Figures from the statistics department show that nearly 20% of homes in Selangor and Penang were vacant in 2020. More than 53,000 units were unoccupied in Penang, often waiting to be sold or rented out. In Selangor, 343,562 homes were reported vacant, with about 197,065 of them either newly completed or pending occupancy. As of mid-2024, there were 22,642 completed homes that remained unsold for more than nine months, according to the national property information centre. These unsold homes, also known as overhang units, were worth a total of RM14.24 billion. Theebalakshmi noted that countries like Canada, Australia and Singapore have vacancy or higher property taxes on empty or non-owner-occupied homes, ranging from 1% to 3% of the property's value. A 3% tax applies to homes left empty for more than six months in Vancouver, Canada, while a sliding scale is used in Melbourne, Australia, starting at 1% in the first year of vacancy and increasing in later years. In Singapore, higher property tax rates are imposed on non-owner-occupied homes. Azree Othuman Mydin. Azree Othuman Mydin, the dean of Universiti Sains Malaysia's housing, building and planning school, said a vacancy tax would reduce flipping and hoarding, especially for properties in the RM300,000 to RM500,000 range. Azree also proposed raising the real property gains tax for those who sell their units too early, saying this would make quick resale less attractive and help curb flipping. Apart from a ban on renting or leasing affordable units during the minimum tenancy period unless permitted or approved by local authorities, he suggested that buyers who leave affordable units vacant without a valid reason may be prevented from purchasing future government housing units. 'If we want housing to go to those who need it most, we must stop treating homes as trading tools,' he said.
News.com.au
12-06-2025
- Climate
- News.com.au
Icy homes: Why most Aussies are using their heaters the wrong way
Icy mornings across much of the country in recent days have delivered a reminder to many Aussies that no matter how much they blast their heaters, warmth never seems to stay for long. Housing experts have revealed that this chill isn't just down to the weather — it's a design flaw baked into the way Australian homes have been built for decades. And it means that most households are using heaters in an inefficient way that's sending their power bills through the roof – without doing an adequate job of keeping the interior warm. A common problem is that heaters are being used in rooms that lack insulation and are too open and too large for the heater to deliver any meaningful feeling of extra warmth. Dr Sarah Robertson, research fellow at the RMIT University Centre for Urban Research said most Australian homes were simply never designed with winter comfort in mind. 'We have work to do to improve the energy efficiency of our housing stock,' she said. Previous energy prices had played a part in promoting a housing climate where poor insulation was common, Dr Robertson added. 'We didn't have the pressure of high energy prices for a long time, until more recently when the costs went up markedly. 'There wasn't that pressure to look at energy efficiency because energy was more affordable.' She added that a key factor in why Aussie homes were often colder than those in chillier countries was that energy efficiency has never been a top priority in residential building standards. 'Our homes tend to lose warm air through poorly sealed windows and doors, and lack the basic insulation needed to retain heat,' Dr Robertson said. 'That makes heating expensive and inefficient.' Even newer homes — some equipped with modern heating systems — struggle to perform. Large open-plan designs and limited zoning controls often mean residents are forced to heat the entire house rather than a single room, driving up costs while also minimising heater effectiveness. Australian energy regulations have improved over time, but housing researchers claim the standards are still far behind comparable nations. Dr Nicola Willand of the RMIT University School of Property, Construction and Project Management has previously noted that Aussie regulatory standards reinforced heating levels that were below par. Homes in North America and Europe — even in comparable climates — are more than 50 per cent more efficient when it comes to heating and cooling. The average overseas home exceeds a seven-star energy rating, while most Australian homes still lag well behind that benchmark, even after almost two decades of awareness. The National Nationwide House Energy Rating Scheme, which governs home energy star ratings for new dwellings, assumes living room heaters are switched off between midnight and 7am. The problem is that this warmth dissipates quickly in most Aussie homes because of the poor insulation, resulting in cold living areas. The scheme also assumes a heating thermostat setting in bedrooms of 15 degrees between midnight and 7am – lower than the 18 degrees recommended by the World Health Organisation. '(These) assumptions suggest that being cold at 7am, when most of us are getting ready for work and school, is acceptable,' Dr Willand said. 'By contrast, energy efficiency ratings in other countries will assume heating in all rooms and at all hours of the day and night.' Poor thermal design is only part of the problem. Many Aussies remain unaware of the health risks of cold indoor air, including respiratory illness, cardiovascular stress, and the spread of mould. Retrofits – including proper ceiling insulation, draught sealing, window upgrades, and thermal assessments – are now being recommended. Many states offer rebates to help with the cost, but take-up remains modest.
