Many homeowners in today’s market are feeling “locked in” and “priced out”.

In a recent episode of Stocks in Translation, U.S. housing strategist at Morgan Stanley, James Egan, explores the “locked in, priced out” phenomenon and its impact on the housing market.

“We had home price growth at record highs. Now, mortgage rates are increasing as well. Affordability deteriorating faster than we've ever seen it,” Egan continues. “The kind of consensus thinking was home prices have to fall, affordability bad home prices come down. And then the lock-in effect is what has kept home prices or has played a big role in keeping prices as elevated as they are.”

As for how we got here, Egan adds, “The pandemic, kind of, touched off a perfect storm… So, you have demand for single-family shelter. The historically low mortgage rates means that the buying power of that demand is up, and all of that demand is materializing into the tightest supply environment we have ever seen. Sending prices even higher.”

Listen to the full episode here, or wherever you get your podcasts.

For expert insight and the latest market action, click here to watch more Stocks in Translation.

This post was written by Neil Mulcahy.