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He shared his thoughtswith Newsweekabout why these states are facing special challenges.
Heres why there are unprecedented housing markets in these three states,according to OLeary.
Low Mortgage Rates Keep People in Their Homes
OLeary explained that many homeowners have very lowmortgage rates.
This means they pay less interest on their home loans.
They have no reason to sell their homes, OLeary said.
Because of this, fewer people are selling their homes in these states.
Simply put, this means there arent many houses available for people who want to buy.
This was done to fight inflation, which is when prices for things go up quickly.
That was unprecedented in terms of the speed, OLeary said about the rate increases.
These higher interest rates made it more expensive for people to borrow money to buy homes.
Mortgage rates are now the highest theyve been in about 20 years.
OLeary mentioned that people are leaving states likeCalifornia, Massachusetts, New Jerseyand New York.
These people are moving to places like Miami and Austin, Texas, because its cheaper to live there.
Unfortunately, when lots of people move to these places, it makes houses more expensive for everyone.
More people can now work from home, so theyre moving to different places.
Usually, when its more expensive to borrow money, fewer people buy houses.
But thats not happening now.
I dont think anybody saw that coming, he said.
It doubled or tripled the cost of mortgage and had no effect on demand.
OLeary explained that in the past, mortgage rates were often around 6 or 7 percent.
So even though rates are high now, theyre not much higher than theyve been before.
The housing markets in Texas, Florida and Tennessee are facing unusual challenges.
People withlow mortgage ratesdont want to sell their homes.
At the same time, people are moving to these states from more expensive places.
And changes in how people work mean more people want to live in these areas.
This has created a situation that even experts like OLeary find surprising and hard to explain.
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