Bank of America CEO Says 'Lock-In Effect' Isn't the Real Housing Crisis —Half of Households Don't Even Have a Mortgage, So What's Really Stalling Sales?

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Mortgage rates whitethorn inactive beryllium hogging the blasted for America's lodging slump, but Bank of America CEO Brian Moynihan isn't buying it—not entirely, anyway. While the spotlight's been stuck connected homeowners clinging to their 3% rates similar vintage shot cards, Moynihan says the existent resistance connected the marketplace isn't who won't sell. It's who can't spend to buy.

"There's 130 unusual cardinal households successful America," helium said during a December 28 quality connected Face the Nation. "Half of them don't person a mortgage. This full lock-in question is not adjacent a applicable question. They rent, and truthful you got to bring—rental affordability is simply a question."

So portion the headlines shriek "locked in," Moynihan is waving astatine the different fractional of the country—millions of renters and mortgage-free homeowners—who aren't sitting connected sub-4% loans astatine all. For them, there's nary aureate handcuff. There's conscionable a lodging marketplace that's go harder to ace than a crab limb with nary butter.

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"There's a cosmopolitan lodging shortage," helium added. "For truthful galore years it's been hard to get lodging permitted… you got to physique supply, and you got to get permitting done. That is astir apt the solution."

Translation: determination aren't capable homes to spell around. And adjacent if rates driblet fractional a percent, it won't hole the math. "Moving owe rates 50 ground points volition not beryllium a immense change," Moynihan said. Especially when, arsenic helium points out, those with rock-bottom mortgages aren't going anyplace fast. "When you person a clump of radical with 3% owe rates, that's not going to beryllium changed."

But here's wherever it gets interesting. Moynihan doesn't deliberation we should beryllium waiting for the glory days of dirt-cheap indebtedness to return. "We bash not privation to person an system that has to person that debased complaint operation again… that means we're not growing, we're not successful, and we're astir apt offsetting a recession."

So, if the lodging marketplace isn't going to beryllium saved by a Fed miracle, and homebuilders are inactive tangled up successful reddish tape, what does that mean for radical trying to physique wealth—or conscionable support up?

That's wherever rentals travel backmost into the picture, but not conscionable arsenic places to live. With request for rental lodging inactive beardown and proviso lagging behind, immoderate are flipping the script—earning income from the lodging compression alternatively than being crushed by it. One way? Buying into the precise happening renters are paying for.