A new Redfin survey reveals that 91% of Gen Z adults say housing affordability is their top voting issue ahead of the 2024 election, as high mortgage rates and low inventory levels strain the market. Redfin Chief Economist Daryl Fairweather joins Wealth! to discuss how homebuyers should navigate the current housing market as inflation continues to be a pressure.

"It is, for the most part, less affordable now than it was last year, and a whole lot less affordable than it was before the pandemic," Fairweather explains. She adds that in the short term, rents will probably be more affordable in places where inventory is going up. She points to the South as a region seeing rent decrease as construction increases.

Fairweather adds, "I think everybody is starting to recognize that adding to the supply is the only way to sustainably make housing more affordable." She explains that those set on buying homes in the current market should make sure they can afford their mortgages in the short term: "You shouldn't bank on rates coming down as part of your financial plan because they may not come down or they may not come down as quickly as you were hoping."

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Melanie Riehl

Video Transcript

Sticking with housing.

It's not an easy market for potential home buyers who are facing elevated prices and mortgage rates and low albeit recovering inventory levels.

And now a new Redfin survey reveals a whopping 91% of adult Gen Zers say housing affordability is their top voting issue ahead of the 24 election here with more is Darryl Fairweather who is the red fin chief economist Darryl.

Great to see you and thanks so much for hopping on to discuss this data with us.

I mean, just walk us through the findings here because I think that's really what's striking about the number of people that are using this as a top voting issue.

Yes and Gen Z thought of housing as being the most important compared to other generations.

It tends to go down with age.

The younger people care the most about housing, baby boomers who are already homeowners already have fixed mortgage rates.

A lot of them don't really uh see housing as their top issue.

They care more about other things, sir.

Yeah and sir with all of this in mind, where are we seeing moderation in the housing market?

Danny was just laying out some of the latest data that's come through via uh the couple weeks of economic data.

But I mean, even this morning, it seems like we're getting more fresh readings just about affordability when it comes to buying a home.

It is for the most part, less affordable now than it was last year and a whole lot less affordable than it was before the pandemic.

We're seeing prices come down in Florida, but you have to remember that Florida was gaining uh more and more value up until last year.

So this is kind of an overdue correction, the rest of the nation.

It's still prices going up and that's amidst these high mortgage rates, but rents are coming down.

So if you are on the verge of deciding whether to buy a home or to rent, at least, you know that for the short term, your rents are probably going to get more affordable, not uh that's affordable.

All of this considered.

I mean, it's, it's coming back to inventory both on the existing side and on the new home side as well.

And, and we're starting to see that the new home build outs get to some of the highest percentages, at least on a historical basis of the overall inventory and market that that's coming online here.

And so what, what do you make of, of that dynamic that we're tracking?

So the places where rents are coming down, it is where inventory is going up and some of that is coming from condos being converted into rentals.

Some of that is coming from new construction.

There's a lot of new construction in the south and other places where there isn't new construction where there aren't that many needs to begin with.

Rents are still rising.

So even though I said rents are coming down, it's not a guarantee.

It does depend on where you are in the country.

Is there a silver lining to all of this?

Well, I think that the fact that so many voters care about housing makes it more likely that this issue is going to be addressed.

Uh President Biden has been talking about housing affordability on his campaigns.

And at the local level, there has been progress with zoning reform and that's in red states and in blue states, it's going to take time for more inventory to come online, for affordability to come down.

But I think everybody is starting to reckon that adding to the supply is the only way to sustainably make housing more affordable.

Certainly.

And then when we think about the number of people that are saying and making the decision now to say, all right, maybe we just purchase now and refinance later is that part of the home buying calculus for people who are willing to take on a mortgage rate at this level.

Well, if you're going to take on a mortgage, it's really important that you can afford it in the short term.

You shouldn't bank on rates coming down as part of your financial plan because they may not come down or they may not come down as quickly as you were hoping.

But I think for the most part people who are getting these adjustable rate mortgages, they can afford them and it's more of a hope that rates will come down or they'll be able to refinance than something that they're really banking on.

Darryl Fairweather, who is the Redfin chief economist Darryl.

Great to see you.

Thanks for jumping on Yahoo Finance with us.

Thank you.

Appreciate it.