Federal Home Loan Mortgage Corp (OTCMKTS:FMCC) released its monthly vision for November analyzing how different long-term trends can shape the U.S. housing market. These trends in discussion are increasing income inequality, the increase in land use limitations and the increasing share of land prices.

Impact of three trends

The long-term impacts of the mentioned trends include a probable boost to the homeownership rate if future modifications in income distribution are equivalent to changes in the last four decades. There may be a jump in housing inequality, particularly within towns versus between cities. Also, there can be increased volatility in the house prices most remarkably where buildable land is limited. The three trends can have an impact on the homeownership return as an effective way of wealth creation that will be most marked in richer states and is expected to be particularly high.

The decline in the share of middle – and lower-income households and the jump in the number of upper-income households can move the shares of mortgage capital supplied by the GSE, private sector and FHA/VA in the next few decades.

Sean Becketti of Federal Home said that these long-standing trends eventually will have more impact on housing compared to the week-to-week fluctuations of mortgage rates or any other short-term pointers of housing activity. These trends impact mortgage and housing markets through their impact on both the supply of and the demand for housing.

The variation in income distribution moves the demand for housing both the demand for varied types of housing and demand for homeownership. The increasing share of land expenses moves the supply of housing; houses prices are more compared to before following the higher cost of the land element of the house. And land use limitations border the supply of more-affordable accommodation in richer states. No study of the upcoming housing market is comprehensive without considering them.