According to billionaire real estate developer Stephen Ross, the U.S. housing market in general is "overbuilt," and rising interest rates are keeping buyers out of the game.
In an interview with CNBC's Diana Olick, Ross says that rates increases reduces affordability, tightening the market, "In soft markets, you want as broad a market as you possibly can." Mortgage application volume decreased 22 percent annually in the week starting November 5, and purchase volume dropped three percent. Ross says that volume levels could drop lower "because there is a lot of supply." Yet, developers are mostly taking the rate hikes in stride, as they are still historically low. Says Ross, "If they have money, they're going to build." Ross' Related Companies is currently building the $20 billion Hudson Yards megadevelopment projected to open in 2019.
The homeownership rate among millennials is lower than that of their parents and grandparents due to a number of personal and economic factors. The rental market, on the other hand, has been "really strong across the marketplace" as more young people would rather rent than buy today, said Ross, who also owns the Miami Dolphins. "I think that all goes back to the housing crisis when they saw what happened to their families, you know, in 2008, and the dislocation that that occurred," he added.
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