Wells Fargo: Brace for 8% mortgage rates to drag the US housing market into a 1980s-style recession

[Aquaman]

George Glover 

Oct 31, 2023, 9:44 AM CDT

The Federal Reserve's aggressive interest-rate hikes could trigger a 1980s-style recession for the US housing market, according to Wells Fargo.  Henryk Sadura/Shutterstock

 

• The US housing market looks like it's headed for a recession, Wells Fargo has warned.
• Mortgage spiking to nearly 8% will cause homebuying to plummet, according to the bank.
• Strategists compared the current situation to the 1980s, when the Fed's aggressive interest-rate hikes also put pressure on the property market.

The Federal Reserve's aggressive interest-rate hikes could be about to trigger a housing-market recession that echoes the slowdown of the 1980s, Wells Fargo has warned.

The central bank has signaled in recent months that it'll keep borrowing costs at a higher level for longer well into 2024 in a bid to quell inflation – and that'll fuel declines in both construction and activity, according to the bank.

"After generally improving in the first half of 2023, the residential sector now appears to be contracting alongside the recent move higher in mortgage rates," economists Charlie Dougherty and Patrick Barley wrote in a research note last week.

"Although mortgage rates may gradually descend once the Federal Reserve begins to ease monetary policy, financing costs are likely to remain elevated relative to recent norms," they added. "A 'higher for longer' interest rate environment would likely not only weigh on demand, but could also constrain supply by reducing new construction and discouraging prospective sellers carrying low mortgage rates from listing their homes for sale."

https://www.businessinsider.com/housing-market-crash-1980s-style-recession-mortgage-rates-wells-fargo-2023-10

[summer27]

job market baagunte, why would people shy away from buying house? definetely it will slow down but it wont to into housing-recession..

[jpismahatma]

All talks no price coming down. On ground lot of h1b and h4 pair buying up homes. No daddy listening.

[perugu_vada]

20 minutes ago, summer27 said:

job market baagunte, why would people shy away from buying house? definetely it will slow down but it wont to into housing-recession..

issue is inflation .. entha job market bagunna kuda .. single job tho ppl are not able to meet the expenses .. forget about buying and owning house .. mana IT ni pakkana pedithe .. verey jobs chesey vaalla common complaint is that .. 

[Aquaman]

Just now, perugu_vada said:

issue is inflation .. entha job market bagunna kuda .. single job tho ppl are not able to meet the expenses .. forget about buying and owning house .. mana IT ni pakkana pedithe .. verey jobs chesey vaalla common complaint is that .. 

how is austin market bro

[perugu_vada]

1 minute ago, Aquaman said:

how is austin market bro

new houses ekkuva release cheyatledu telivi ga .. just handful like 2-3 releasing anthe .. vati medha incentives istunaru .. quick move-in meedha baga thagguthaay .. as long as facing vaasthu ain chuuskokapothe

inka old houses aithe ... mataash .. baaga paddaay prices 

[VictoryTDP]

2 minutes ago, perugu_vada said:

new houses ekkuva release cheyatledu telivi ga .. just handful like 2-3 releasing anthe .. vati medha incentives istunaru .. quick move-in meedha baga thagguthaay .. as long as facing vaasthu ain chuuskokapothe

inka old houses aithe ... mataash .. baaga paddaay prices 

Ayina nuvvu @Ravi860 and others ni Austin ki move ayyela chesav and real estate baaga kumming ani @ARYA telling mari 

[perugu_vada]

1 minute ago, VictoryTDP said:

Ayina nuvvu @Ravi860 and others ni Austin ki move ayyela chesav and real estate baaga kumming ani @ARYA telling mari 

[terminator_desi]

45 minutes ago, perugu_vada said:

new houses ekkuva release cheyatledu telivi ga .. just handful like 2-3 releasing anthe .. vati medha incentives istunaru .. quick move-in meedha baga thagguthaay .. as long as facing vaasthu ain chuuskokapothe

inka old houses aithe ... mataash .. baaga paddaay prices 

some where in your older posts you mentioned you were staying in Austin for more than 10 years and looks like you also got GC recently.Do you regret not buying home when pries were cheap bro?

[Sreeven]

1 hour ago, perugu_vada said:

issue is inflation .. entha job market bagunna kuda .. single job tho ppl are not able to meet the expenses .. forget about buying and owning house .. mana IT ni pakkana pedithe .. verey jobs chesey vaalla common complaint is that .. 

Inflation vhala varaku taggindi ga last year compare cheste ippudu 3.7 something vundi

[jpismahatma]

1 hour ago, terminator_desi said:

some where in your older posts you mentioned you were staying in Austin for more than 10 years and looks like you also got GC recently.Do you regret not buying home when pries were cheap bro?

 @perugu_vada  he is king cool. 

[perugu_vada]

1 hour ago, terminator_desi said:

some where in your older posts you mentioned you were staying in Austin for more than 10 years and looks like you also got GC recently.Do you regret not buying home when pries were cheap bro?

no regrets uncle .. i am fine with where i am at .. 3 yrs back family emergency ayi India vellaali ante .. i was ready to go with no strings attached.. and came back after 4-months stay in India .. with positive news .. adhe illu koni unte it would not have been that easy 

afterall owning a house is not my only dream .. 

[lollilolli2020]

16 hours ago, perugu_vada said:

no regrets uncle .. i am fine with where i am at .. 3 yrs back family emergency ayi India vellaali ante .. i was ready to go with no strings attached.. and came back after 4-months stay in India .. with positive news .. adhe illu koni unte it would not have been that easy 

afterall owning a house is not my only dream .. 

aa dream entoo kuda cheppeseyyi. 

[Aquaman]

18 minutes ago, lollilolli2020 said:

aa dream entoo kuda cheppeseyyi. 

to be a real estate agent and let other DB members buy homes emo 😁

[perugu_vada]

19 minutes ago, lollilolli2020 said:

aa dream entoo kuda cheppeseyyi. 

dreams dream-projects em levu uncle .. just want to lead happy healthy life chaalu