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5 RECESSION IN THE FORECAST FOR 2023 A new outlook from the Mortgage Bank- ers Association found that due to current market conditions, purchase originations and refinance volume are now forecasted to both drop in 2023. e outlook was presented by Mike Fratantoni, Chief Economist and SVP for Research and Industry Technology; Joel Kan, VP, Deputy Chief Economist; and Ma- rina Walsh, CMB, VP of Industry Analysis. By the end of 2023, total mortgage volume is expected to decline 9% to $2.05 trillion from the $2.26 trillion expected in 2022. Purchase originations are forecast to decrease by 3% to $1.53 trillion next year, while refinance volume is anticipated to decline by 24% to $513 billion. According to Fratantoni, the likelihood of a future recession is only increasing due to the Federal Reserve's continued efforts to tamp down inflation; heightened interest rates—along with affordability challenges— will slow homebuyer demand and purchase origination volume in 2023. "Next year will be particularly challeng- ing for the U.S. and global economies. e sharp increase in interest rates this year—a consequence of the Federal Reserve's efforts to slow inflation, will lead to an equally sharp slowdown in the economy, matching the downturn that is happening right now in the housing market," Fratantoni said. "MBA's forecast calls for a recession in the first half of next year, driven by tighter financial conditions, reduced business investment, and slower global growth. As a result, the unem- ployment rate will increase from its current rate of 3.5% to 5.5% by the end of the year. Inflation will gradually decline towards the Fed's 2% target by the middle of 2024." Furthermore, Fratantoni believes that as the economy slows, longer-term rates, including mortgage rates, will begin to fall from current peak levels. However, there will continue to be "significant volatility in rates in the near-term due to quantitative tight- ening by the Fed and other central banks, and as markets grapple with significant geopolitical, economic, and monetary policy uncertainties." e MBA is forecasting that mortgage rates will end 2023 at 5.4% after more than doubling in 2022. "e slowdown in housing activity and higher mortgage rates will quickly cut the rate of home-price growth. MBA expects national home prices will be roughly flat in 2023 and 2024, allowing household incomes some much-needed time to catch up to elevated property values," Kan said. "How- ever, many local markets will see home-price declines, even if national price measures remain largely unchanged." According to Kan, first-time homebuyers will make up the glut of demand over the next few years, given current trends. e combination of still-low levels of for-sale inventory and slowing new construction activity means that housing supply is likely to remain constrained for some time. "Origination volumes have declined, rev- Journal Compiled by the DS News Staff TA K E A L O O K I N S I D E T H E N U M B E R S DATA BITS Source: September 2022 WalletHub Market Report I N S I D E T H E J O U R N A L | I N F O S T R E A M | G O O D R E A D S | M O V E R S & S H A K E R S A Redfin study found that millennials and Gen Zers allocate more than one-quarter of their income to housing. ATTOM's August Foreclosure Market Report revealed a total of 34,501 U.S. properties with foreclosure filings, including default notices, scheduled auctions, or bank repossessions, up nearly 120% from a year ago. 1. MAINE 2. ALASKA 3. NEW HAMPSHIRE 4. HAWAII 5. UTAH 6. NEVADA 7. VERMONT 8. ARIZONA 9. WASHINGTON 10. RHODE ISLAND STATES LEAST IMPACTED BY NATURAL DISASTERS 1. MISSISSIPPI 2. LOUISIANA 3. TEXAS 4. IOWA 5. ALABAMA 6. OKLAHOMA 7. KANSAS 8. NORTH CAROLINA 9. FLORIDA 10. MISSOURI STATES MOST IMPACTED BY NATURAL DISASTERS CITY RANK CITY RANK Continued on next page