Those loan officers being laid off might get new jobs at banks or in other industries, and even if mortgage rates fall back to 4% in 2023 it will take lenders time to increase staffing levels to meet demand. That will keep mortgage rates higher than they otherwise would be, holding back a housing market boost that policy makers might be rooting for once inflation has been tamed.
And the same goes for other parts of the industry that are evaluating staffing levels right now in the face of sagging demand. We’ve seen how many goods need to be sourced to build a home—lumber, paint, windows, garage doors, appliances and so on. It's no different for the labor needed for construction and to complete transactions between buyers and sellers.
Right now, inflation is arguably the first, second and third economic priority of the White House, Congress, Federal Reserve and the general public. If housing market activity in the summer of 2022 is a casualty along the way, so be it. But while higher mortgage rates and less panic buying might help relieve imbalances in the short term, it’s doing nothing to address the longer-term need for more homes. Which means that this cooling in the market now will probably make things worse in the future.
Conor Sen is a Bloomberg Opinion columnist. He is founder of Peachtree Creek Investments and may have a stake in the areas he writes about.