scorecardHousing isn't getting any cheaper. But an expensive mortgage is not the only thing making homes so unaffordable.
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Housing isn't getting any cheaper. But an expensive mortgage is not the only thing making homes so unaffordable.

Phil Rosen   

Housing isn't getting any cheaper. But an expensive mortgage is not the only thing making homes so unaffordable.
Stock Market4 min read
John M Lund Photography Inc / Getty Images

Good morning to the smartest corner of the internet. Senior reporter Phil Rosen here. Based on the thoughtful tweets (@philrosenn) and email responses you send me each morning, I'm convinced there's no group more clever than Opening Bell readers.

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Now, for one last time before the weekend, let's get to the news. Today we're breaking down the very tight, still quite unaffordable housing market.

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1. Everyone's talking about how the Fed's rate hikes have sent mortgage rates skyrocketing. But even as mortgage rates have climbed above 7%, my colleague Alcynna Lloyd and I report that there's more to the story.

Economists told us that there's a second part to the housing affordability issue, and that an under-investment problem has been quietly simmering in US residential real estate for over a decade.

"There's still this gap between demand and supply because we were underbuilding for many years," Nadia Evangelou, senior economist for the National Association of Realtors, told us. "So now we see demand is slowing, but it still outpaces supply."

The general gist is that the surge in home prices — fueled by the low rates of the pandemic era — hasn't come down as fast as mortgage rates have come up.

And that shortage, Evangelou said, can be traced back to the early aughts leading up to the 2008 financial crisis. Homebuilders built so many houses that inventory dramatically outpaced demand.

But companies have overcorrected since then. The rate of building dipped below the historical average for the next decade.

Robert Dietz, chief economist for the National Association of Homebuilders, said the pandemic made things even worse.

"We know that higher mortgage rates price out demand across the board for both new and existing markets, but the challenge is particularly acute in new construction because you also have the run up in construction costs," he said.

Any meaningful declines in prices remain unlikely, according to real estate experts, and inflation, high cost of materials, and tight supply of homes look like they'll persist for some time.

Evangelou's prognosis leaves little room for Americans seeking a new home: "Home buying activity is slowing down, it's the biggest slowdown since 2007, with eight straight months of home sale declines. But we don't see that in home prices."

There's a saying, "all real estate is local." What trends have you noticed in your community? Are prices increasing or decreasing in recent months?

Tweet me (@philrosenn) or email me (

In other news:

REUTERS/Brendan McDermid

2. US stocks rose after Thursday's downbeat session as investors ready themselves for the October jobs report due early Friday. The nonfarm payrolls data will shed light on where the labor market stands. Dow Jones economists expect 205,000 jobs were added last month, with unemployment holding steady at 3.5%. Take a look at how the S&P 500 is moving now.

3. Earnings on deck: Berkshire Hathaway, Hershey, and Cardinal Health, all reporting.

4. This self-made millionaire who made his money investing in real estate isn't interested in taking out a mortgage right now. Todd Baldwin, a Seattle-based investor, said he isn't going to pay more than 6% interest: "If the deal is over 6%, I'm going to pay cash and hopefully get a discount."

5. Tech stocks have plunged while energy stocks have skyrocketed this year. But for a sustainable bull market to return, Ned Research analysts said, tech will have to participate once again. In other words, don't expect energy to lead the way in an upswing.

6. The International Energy Agency warned that Europe's at risk of a natural gas shortage next year. It's possible that stockpiles may only get 65% full next winter, with Russian supply cut-offs increasing as well as a rebound in gas demand in China. "There is a danger of complacency creeping into the conversation."

7. The US dollar's blistering rally is almost over, Societe Generale said Thursday. Drivers of economic outperformance are fading now for the greenback, which has risen to a 20-year high this year. After trouncing other currencies in 2022, the firm said the dollar is approaching a phase of "trendless trading."

8. A 32-year-old military veteran who owns 74 rental units explained her cash flow strategy. She was able to add roughly $47,000 annually to profit margins without buying any more properties. Here's her plan to navigate the uncertainty in the current market.

9. Stocks still don't look cheap and investors shouldn't get bullish too soon, according to a senior strategist for Goldman Sachs. Ben Snider said rising interest rates present headwinds, but he's not expecting a recession. The Wall Street pro broke down how to make the most out of limited upside and stay safe in 2023.

Moderna stock
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10. Moderna shares swung wildly Thursday after the COVID-19 vaccine maker slashed its yearly sales outlook. It also missed on third-quarter expectations, as short-term supply constraints hampered the company's revenue expectations. Get the full details here.

Keep up with the latest markets news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief from the Insider newsroom. Listen here.

Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email

Edited by Max Adams (@maxradams) in New York.