Nov212014
Existing home sales decline 5% in West despite low rates
Plagued by affordability problems, the Western US endured a 5% decline in home sales in October 2014.
Ever since mortgage interest rates suddenly and unexpectedly rose from 3.5% to 4.5% in May of 2013, the market has been weak. For almost a year prices were flat while sales volumes declined. The spring rally of 2014 pushed prices a little higher, driven mostly by rising rents, but resale volume was very low, suggesting the gains do not represent fundamentally strong demand from an improving economy.
For the housing market to really improve, the fundamentals underpinning the market must improve because manipulating inventory and interest rates are short-term market props, not fundamental drivers of demand. The house price rally in 2012 and 2013 had little or no fundamental support. The housing market needs growth in jobs and incomes because people who get high paying jobs form new households and often buy houses. Although the job market has been steadily improving since early 2010, the rate of job growth has been relatively weak when compared to previous recessions, and the quality of these jobs has been suspect at best, with many being part-time.
Coastal California housing is the least affordable in the US because the chronic shortages of inventory forces buyers to compete and bid prices higher. These higher prices are hurting both resales and new home sales. Further the market may face serious long-term problems with demand, a weakness not caused by tight mortgage standards. But despite the problems, both rents and resale prices continue to rise, an outcome specifically engineered by the banks whose loan modifications push up rents, and create the cloud inventory phenomenon that pushes up resale prices.
Here is another way to visualize the problem:
We know the housing market is increasingly mortgage interest rate sensitive, as the chart below demonstrates.
What was surprising is that falling mortgage rates throughout 2014 didn’t do more to stimulate sales. Higher prices are the real problem. From early 2012 to mid 2013, house prices rose significantly despite weak employment data and flat incomes. If houses get more expensive, marginal buyers get priced out, and without toxic mortgage products to help them, a depleted buyer pool results in low sales volumes.
Existing-Home Sales Rise in October, First Year-Over-Year Increase since October 2013
Media Contact: Adam DeSanctis
WASHINGTON (November 20, 2014) – Existing-home sales rose in October for the second straight month and are now above year-over-year levels for the first time in a year, according to the National Association of Realtors®.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.5 percent to a seasonally adjusted annual rate of 5.26 million in October from an upwardly-revised 5.18 million in September. Sales are at their highest annual pace since September 2013 (also 5.26 million) and are now above year-over-year levels (2.5 percent from last October) for the first time since last October.
Lawrence Yun, NAR chief economist, says the housing market this year has been a tale of two halves. “Sales activity in October reached its highest annual pace of the year as buyers continue to be encouraged by interest rates at lows not seen since last summer,
Sales have held steady since July, thanks mostly to the NAr seasonal adjustments, which provide great opportunities for the NAr to spin the data. On an unadjusted basis, October showed an insignificant bump similar to November 2013, but the trend is still down.
improving levels of inventory and stabilizing price growth,” he said. “Furthermore, the job market has shown continued strength in the past six months. This bodes well for solid demand to close out the year and the likelihood of additional months of year-over-year sales increases.”
LOL! Yun is a master of spin. The likelihood of additional months of year-over-year sales increases is very high, but not because sales are strong or the job market is improving or any of the other bogus reasons he listed — sales volumes will look better Y-o-Y because the sales in late 2013 and early 2014 were terrible. It must be comforting to Mr. Yun that he has upcoming data points he can spin positively.
The median existing-home price for all housing types in October was $208,300, which is 5.5 percent above October 2013. This marks the 32nd consecutive month of year-over-year price gains.
Total housing inventory at the end of October fell 2.6 percent to 2.22 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace – the lowest since March (also 5.1 months). Unsold inventory is now 5.2 percent higher than a year ago, when there were 2.11 million existing homes available for sale.
“The growth in housing supply this year will likely prevent the drastic sales slowdown and coinciding spike in home prices we saw last winter due to low inventory,” says Yun.
The drastic slowdown in sales had absolutely nothing to do with inventory, despite the NAr’s repeated attempts to spin it that way. Sales dropped because the sudden mortgage rate spike and rising prices forced marginal buyers out of the market. It’s also why sales have remained low despite increasing inventories since then. Also, I have no idea what he’s talking about with the spike in home prices last winter. The price rally ended in June of 2013, and prices have been flat since then.
“However, more housing starts are needed to increase supply, meet current demand and keep price growth in check.”…
Throwing the builders a bone… It’s not accurate, but it makes the builders feel good.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage in October dropped to 4.03 percent, its lowest level since June 2013 (4.07 percent), and down from 4.16 percent in September.
This is why sales are not plummeting like last year.
The percent share of first-time buyers in October remained at 29 percent for the fourth consecutive month; first-time buyers have represented less than 30 percent of all buyers in 18 of the past 19 months. A separate NAR survey released earlier this month revealed that the annual share of first-time buyers fell to its lowest level in nearly three decades.
(See: First-time homebuyer participation hits three-decade low)
Properties typically stayed on the market in October longer (63 days) than last month (56 days) and a year ago (54 days).
When it takes longer to sell a home, the market is weakening. There is no convincing way to spin that, so Yun buried it in a data dump at the bottom of the report and hoped everyone would miss it.
Existing-home sales in the West declined 5.0 percent to an annual rate of 1.14 million in October, and remain 3.4 percent below a year ago. The median price in the West was $296,800, which is 5.0 percent above October 2013.
While the rest of the country may celebrate the tiny statistical bump in home sales in October, the West Coast has less reason for excitement. Sales are weaker this year than last, mostly due to affordability issues, and although declining mortgage rates are helping, what will happen if they go up from 4% to 5% next year?
[listing mls=”OC14244948″]
Fannie Mae: Don’t expect 2015 to be a breakout year for housing
While the year of the purchase mortgage is coming to a close in less than two months, 2015 is not likely to waiver off of 2014’s trends.
At the end of 2013, Freddie Mac said that for the first time since 2000, the industry is going to see the mortgage market dominated by purchase activity as the refinance share drops below 50%, creating a purchase dominated market.
Now heading into 2014, the year is expected to produce much of the same.
“The housing market continues to grind its way upward, but we don’t expect a breakout performance in 2015 as the fundamentals remain somewhat muted,” said Fannie Mae Chief Economist Doug Duncan in its November 2014 Economic Outlook.
While homebuilding activity improved during the third quarter due primarily to the multifamily segment, which is expected to grow further next year, the single-family segment has been relatively flat for some time.
And while rates are hovering around 4%, the temporary burst in refinance activity appears to have subsided and is expected to turn more toward the purchase market in 2015.
“Overall, our view of housing starts, home sales, and home price trends is largely unchanged from the prior forecast – we believe that mortgage activity in 2015 will be very similar to 2014,” Duncan added.
Fannie forecasts full-year economic growth to come in at 2.5% for all of 2015, a modest increase above the 2.1% forecast for 2014.
“The pace of growth around the middle of the year was well above trend, driven by an unsustainable rebound after a weak first quarter, and we anticipate that the fourth-quarter numbers will presage a more modest pace for 2015,” Duncan said.
Can-Kicking hits 7-year high
2,759,000 loans still delinquent
The mortgage delinquency rate declined in October to a seven-year low, according to Black Knight Financial Services’ “First Look” at the October mortgage data.
Per Black Knight’s data, the total loan delinquency rate dropped to 5.44% in October, down 4.14% from September and down 13.43% from the same time period last year.
Black Knight derives this data from reviewing its loan-level database, which represents approximately two-thirds of the overall market.
Additionally, foreclosure inventory fell more than 33% from last year’s total to the lowest level since February 2008. Foreclosure starts in October were also down by more than 10% from September’s figures, falling to 81,400, which was also down 31.48% from last year.
Black Knight also reported that the inventory of non-current loans dropped more than 800,000 in October from last year.
October also saw a rise in prepayments for the first time since July, which Black Knight said is “historically a good indicator of refinance activity.”
The latest Origination Insight Report from Ellie Mae shows just that. According to that report, refinances made up 40% of the total mortgage originations for the month of October, which marked a six-month high.
That’s up from 36% in September. The share of refinances was as low as 32% in July.
October’s jump in refinances reverses a trend that saw the share of refinances fall throughout 2014. In January, for example, the share of refinances was 47%.
Per Black Knight’s data, the number of properties that are 30 or more days past due, but not in foreclosure, fell by 119,000 in October to 2,759,000. That also represents a drop of 393,000 from last year.
Did FHFA’s Watt open the door to ending Fannie, Freddie conservatorship?
Would the Republicans ever allow this?
When Federal Housing Finance Agency Director Mel Watt spoke before the Senate Banking Committee on Wednesday he opened the door to the possibility of ending the GSE conservatorship.
Watt acknowledged that the process would have to begin with the Treasury Department because of the sweep established under the third amendment to the Senior Preferred Stock Purchase Agreements, which prevents Fannie Mae and Freddie Mac from building capital.
Analysts at Keefe, Bruyette & Woods note that Fannie and Freddie are currently undercapitalized and until they are allowed to build up their capital levels, they will remain in conservatorship.
“Despite that, and despite the fact that Watt said there would be no short-term fix for the GSEs, he did say something could change in the longer term,” KBW analysts say in a client note. “Again, this would require moves from Treasury to change the current arrangement with Fannie and Freddie.”
Adam Hodge, spokesperson for the Department of Treasury, said the Administration is committed to ending conservatorship, but as part of a larger piece.
“The Administration continues to believe that the best way to responsibly end the conservatorship is through comprehensive housing finance reform legislation,” Hodge said.
Further, Watt is getting pressure from a number of civil rights groups forming a growing coalition that is also calling for an end to conservatorship.
The Leadership Conference on Civil and Human Rights has bonded with the largest Hispanic civil rights organization in the country, the National Council on La Raza, and sent a letter stating just that.
“The GSEs require capital if they are to serve their historic mission. As your agency proceeds with its decisions on affordable housing policies, those policies naturally must be balanced with FHFA’s statutory obligation as conservator to the safety and soundness of these enterprises,” the organization writes. “We applaud FHFA for its announcement last month on the expansion of lending to middle class borrowers, but we note that this expansion will require capital. We also note that some of the current proposals to raise g-fees and to impose new requirements on private mortgage insurers will increase the costs of borrowing, and would still fall short of building the capital needed to grow a robust and healthy housing market.
“This is especially true given the GSE’s status in what Rep. Maxine Waters, D-Calif., describes as seemingly ‘permanent conservatorship,’ where they are unable to rebuild capital,” the letter states. “In light of this, in order to ensure the best path forward for increasing homeownership in the communities we represent, we believe it is vital to look into unwinding the conservatorship and allowing Fannie and Freddie to begin rebuilding their capital.”
GSEs Announce Updates to Loan Repurchase Guidelines for Lenders
Loans to deadbeats can get passed off to taxpayers
At the direction of the Federal Housing Finance Agency (FHFA), both Fannie Mae and Freddie Mac announced on Thursday updates to their life-of-loan representation and warranty framework in order to provide clarity for lenders regarding the potential risk for repurchase.
The clarification of life-of-loan exclusions announced by the GSEs are meant to provide more certainty to lenders and borrowers alike, which will “increase access to credit without compromising safety and soundness,” according to a prepared statement by FHFA Director Mel Watt.
“The release of details today by Fannie Mae and Freddie Mac clarifying the definition of life-of-loan exclusions and when they apply is a positive step forward for housing finance,” Watt said in his statement. “Concerns about when a mortgage loan might be subject to repurchase, along with other market factors, have contributed to increased credit overlays that drive up lending costs and reduce access to credit.”
For Fannie Mae, the new framework guidelines provide specific requirements under which lenders can seek a repurchase after they are granted relief. One particular clarification made in Thursday’s updates relates to misrepresentations or data inaccuracies around the loan that surface post-relief date – Fannie Mae will seek repurchase on these loans only after is that Fannie Mae will seek repurchase of a loan after administering a “significance test” to determine if Fannie Mae would not have purchased the loan in the first place had the misrepresentations or inaccuracies been known prior to the relief date.
Currently, lenders are granted relief on many representations if one of three requirements is met: The borrower makes timely payments on most loans for 36 months, the borrower makes timely payments on Home Affordable Refinance Program (HARP) or Refi Plus loans for 12 months, or if the loan passes a quality control review administered by Fannie Mae.
Fannie Mae also announced it will seek repurchase on a loan either before or after relief is obtained under the framework if “it determines the failure to comply would impair its rights under the note or mortgage or result in direct liability by Fannie Mae under the law, or if the lender may have violated a consumer protection or other law or regulation that is specifically listed in today’s announcement.”
“The clarity and certainty we’re providing today is crucial for lenders to increase access to mortgage credit,” said Andrew Bon Salle, EVP of Single-Family Underwriting, Pricing, and Capital Markets for Fannie Mae. “There are qualified borrowers who are not being served in today’s market. With this clarity, lenders should have greater confidence in lending to Fannie Mae’s full credit standards and making mortgages available to more borrowers.”
FALSE HOPE NOW Alliance: Non-Foreclosure Solutions Still Total Nearly Half a Million in Q3
Many avoid foreclosure but lose their homes
The number of U.S. homeowners who received non-foreclosure solutions in the third quarter of 2014 totaled approximately 468,000 despite seeing large year-over-year declines in every category of non-foreclosure solutions, according to data released this week by the HOPE NOW Alliance.
Overall, foreclosure completions saw a significant decline in the third quarter. About 108,000 foreclosure sales were completed during Q3, which is the lowest total for any quarter since HOPE NOW began tracking the data in 2007. The number of foreclosure sales in Q3 represented a decline of 6 percent (115,000) from the previous quarter and 36 percent (166,000) from the same period in 2013.
Non-foreclosure solutions, which include permanent loan modifications, short sales, repayment plans, deeds-in-lieu of foreclosure, and other retention plans, declined by 19 percent from Q3 2013 to Q3 2014 (579,000 compared to 468,000), according to HOPE NOW. Despite the decline, non-foreclosure solutions still totaled more than four times that of foreclosure completions (108,000) in Q3, just as they did in the second quarter. Also despite the large year-over-year drop, the number of non-foreclosure solutions increased by 11 percent from the second quarter of 2014 to the third quarter (421,000 up to 468,000).
Foreclosure starts plummeted by 27 percent year-over-year in the third quarter, down to 212,000 from 290,000, according to HOPE NOW. Quarter-over-quarter, however, foreclosure starts jumped 6 percent from Q2 to Q3 (200,000 up to 212,000)
About 109,000 homeowners received loan modifications in the third quarter, a decline of about 6 percent from the previous quarter and 40 percent from the same period a year ago. About 79,000 of the homeowners who received loan mods in Q3 obtained proprietary loan mods and slightly more than 29,000 of them received loan mods under the government’s Home Affordable Modification Program (HAMP), according to HOPE NOW.
Short sales, which are sales of the properties for less than the balance of debts secured by liens against the properties, totaled 30,000 in Q3, a decline of 9 percent (33,000) from the previous quarter and 56 percent from Q3 2013 (68,000), according to HOPE NOW. The number of deeds-in-lieu of foreclosure was reported at 7,000 for Q3, which was a drop of about 7 percent from Q2 (7,500) and 4 percent from Q3 2013 (7,300).
Mortgage loans that were 60 or more days delinquent declined 10 percent year-over-year in Q3, from 2.11 million down to 1.89 million, according to HOPE NOW.
“While the third quarter did show declines across the board in mortgage solutions, it is important to note that foreclosure sales and serious delinquencies have declined accordingly,” said Eric Selk, executive director of HOPE NOW. “The delinquency trends, quarter over quarter, show a steady improvement in the national market and point towards housing stabilization.”
LOL… FALSE HOPE NOW is probably more descriptive of their actual mission.
There is no clearer example of a government program designed specifically to provide emotional support, false hope, and denial for people in a hopelessly bad financial situation.
Current accounting standards: only one side to the ledger.
Current monetary system: pull $100 out of my right pocket, put it in the left pocket = $200; easy money.
Stay tuned.
Current banking system: make $100 loan to someone who won’t repay you, keep loan on balance sheet at full value and book as profit the interest income the borrower is not giving you, and pay yourself a huge bonus for making such a profitable loan.
Current legal system: teach undergrad students how to write laws they can learn to circumvent in grad school.
Current education system: teach undergrad students how to accurately account for business income and expenses so when they get to grad school, they can learn how to fabricate business income and expenses and make it look plausible.
Good ones! Astute 😀
RT @RachelLaMar_JD : Existing home sales decline 5% in West despite low rates – http://t.co/2PyLKwIKxU http://t.co/Ytt9OH3QAb
Maybe mortgage rates won’t rise next year…
Fannie cuts mortgage-rate outlook, but home buyers may not bite
Low rates necessary to sustain prices on low volume
“The housing market continues to grind its way upward, but we don’t expect a breakout performance in 2015 as the fundamentals remain somewhat muted,” said Doug Duncan, Fannie’s chief economist. “We believe that mortgage activity in 2015 will be very similar to 2014.”
There are (at least) three remarkable mortgage-market trends that are shaping home sales, and some of them are working against each other. First, rates are super low. The latest weekly reading from Freddie Mac FMCC, -0.63% showed that the average rate for a 30-year fixed-rate mortgage recently hit 3.99%—a sixth consecutive week of near-4% readings—far below an average of more than 7% over the past three decades.
“This period of low interest rates is extraordinary,” said Susan Wachter, a housing-finance expert at the University of Pennsylvania.
Second, rates have remained in a fairly narrow band for some time. Over the past three years, the rate for a 30-year fixed-rate mortgage has ranged from about 3.35% to almost 4.49%. If Fannie’s Duncan is right, the market won’t see rates climb much higher next year from recent levels.
But another year of low rates may not have much of a positive psychological impact on prospective home buyers, said David Crowe, chief economist at the National Association of Home Builders.
“The relatively lower rates after the spikes of the early 80s did stimulate buying,” Crowe said. “This time around, the low rates are still not as low as they [recently] were so the relative advantage is not as great.”
Third, both Wachter and Crowe noted a persistent block for low mortgage rates supporting home sales: Strict credit standards are keeping many families from getting mortgages, and the situation may not dramatically improve soon.
“The current situation is much more driven by the availability of mortgage credit than the cost,” Crowe said.
[He is completely and totally wrong. Availability of mortgage credit is not a problem; the availability of qualified borrowers is somewhat limiting, but it makes no sense to give mortgages to unqualified borrowers, so that won’t change. The cost of mortgage credit is a huge problem, particularly for first-time homebuyers who generally have to pay mortgage insurance, which is very costly through the FHA. The overriding problem is high prices from efforts to reflate the housing bubble to bail out lenders.]
On forecasts for 2015: Zillow updated their home price forecasts today. They have been forecasting YoY price growth for a long time. Not so today:
http://i.imgur.com/HUvcvx0.png
Zillow’s latest forecast for Orange County – ZERO price growth over the next year.
Nobody has a crystal ball, and interest rates are unpredictable. Still, this is a pretty unoptimistic prediction for a site like Zillow.
In 2015, resale prices and sales will show their dependency on mortgage rates. If rates stay near 4%, both prices and sales volumes will be up. If rates move up to about 4.5%, prices will be flat, and sales will be about the same. However, if mortgage rates go up to 5%, prices will be somewhat weaker, and sales volumes will plummet.
Zillow has enough data that they recognize the market is at the peak of affordability, and they also anticipate rates to rise, so based on the chart they show, it looks like they expect rates of about 4.5%.
We seem to be in a 650k death grip at the moment.
Per Dataquick, the OC SFR median:
05/31/2014 – 650,000
06/30/2014 – 650,000
07/31/2014 – 645,000
08/31/2014 – 649,000
09/30/2014 – 650,000
10/31/2014 – 651,000
And you were the one who said OC house prices are never flat 😉
That was in reference to decade-long housing cycles, not monthly stats. Of course, you knew that already.
The last death grip was 500k and lasted for 2 years, from August 2009 to July 2011. This was when the market was in a bottoming process. The current death grip represents the opposite, a topping process where prices won’t go anywhere while market participants digest current conditions. Eventually, a catalyst will set prices to falling, either rising interest rates, or a recession, or some external threat we can’t foresee.
P.S. 😉
At this point it all comes down to wages and rates. Housing prices can either rise 20k/yr with prevailing wage growth at current rates or stagnate with a .3% yearly rise in rates. Rate increases above that yearly growth tend to be self limiting unless wage growth rises to support it.
The 150k chg from 2011-13 represents about 6 years of price growth assuming there is shift in the mix of homes sold and given the fall in average rates (4.45% to 4.13%). The 150k chg has increased the monthly payment by $600, and the qualifying by $23k/yr. At 3.2% wage growth it takes about 6 yrs to close the gap. If rates stay the same, two years of wage growth and prices will become attractive again.
Glad to see you again, Russ. It’s been a while.
I agree. Now that we are at the friction point of the limit of wages and financing costs, those two variables are going to determine what happens with house prices going forward.
Technology is inherently price deflationary, so “death grip” is quite apropos. Kudos!
I’m glad to see your acceptance of this terminology. pdu would be proud 🙂
Ha! A blast from the past. Wish he’d chime-in here. He was a real character. Knowledgeable too. You used to push his buttons big-time. Cracked me up.
Hi
My wife is a realtor in SD so I was checking some houses in San Marcos and found on Realist software some interesting graph (http://imgur.com/a2jH48I)
Looks like right now is not a good time to buy in terms of equity (right now SD county at 75%): ”
The percentage of properties that have increased or decreased in value based on the year in which they were acquired. The chart compares the sale price of each home to its current market value based on RealAVM, and then calculates the median percentage of appreciation or depreciation.
If the percentage for a year is below 100%, those who purchased homes during that year are likely to have negative equity and may be subject to short sale conditions. If the percentage is above 100%, those who purchased a home that year are likely to have positive equity and the capacity to transact their home in an uncomplicated manner.”
So my 650k question is why would I buy right now? Esp. mortgage rates are expected to increase to 5% next year, so my house would be selling for less since they are paying more interest right!
If rates were high there would be option to refinance later if rates dropped down, but low rates now mean that won’t happen and if rates keep going up prices will keep going down. Correct or am I missing something!!
Thanks!
You are not missing anything. In fact, you see the situation quite clearly. In this market environment, you would buy because you found a property where the cost of ownership is lower than rent, or you found a property you really liked and didn’t care what happens to its resale value. You certainly wouldn’t buy because you thought prices were going to embark on a sustained rally and you’d become wealthy.
couldn’t help by forward this post (favorite part is the “genus move”):
http://pattylanceblog.wordpress.com/2014/11/19/what-does-the-squeeze-on-affordability-mean-to-you/?utm_source=November&utm_campaign=November+2014&utm_medium=email
What does the squeeze on affordability mean to you?
For now, the Fed is not going to touch the Federal Fund Rate. They are looking for specific signs in the overall economy: inflation and unemployment. Inflation has been flat and comfortably below their 2% target. Unemployment, on the other hand, has been steadily and surprisingly dropping and is inching closer to their target. As employment improves, the economy could overheat and the threat of inflation increases. 2014 is looking like the biggest gain in employment in 15 years. If the trend continues, we could see an increase in the Federal Fund Rate sometime next year. It is currently at just about ZERO, so there is only one direction it can go, UP.
The bottom line remains, as the economy improves, interest rates will rise. Eventually, that will occur and locking in on today’s historically low interest rates is an incredibly smart decision for today’s buyer. In five years from now when today’s buyers look back at their purchase in 2014 and 2015, they will see their decision to buy a home as a genius move. Rates will definitely be a lot higher then.
There is a wonderful way to illustrate why purchasing today at the current ultra-low rates is a “genius” move. As interest rates rise, affordability diminishes. The higher the increase, the more it impacts how much a buyer can afford. For example, if a buyer is looking for their mortgage payment to be around $2,000, based upon today’s 4.125% rate, a buyer can afford a $516,000 home with 20% down. At 4.5%, close to where rates were back in January, a buyer would only be able to afford a $494,000 home, or $22,000 less than today. At 5%, it would be $50,000 less. Prior to the downturn, interest rates were at 6.5%, which would be $112,000 less, or a $396,000 home.
The difference is even more staggering in the higher ranges. Buyers looking at a $3,000 per month payment can afford a $774,000 home today versus a $719,000 home if rates increase to only 4.75%. And, buyers looking at a $4,000 month payment can afford a $1,032,000 home today compared to $959,000 with an increase to 4.75%.
Historically speaking, today’s interest rates are astonishingly low. They were at 6.5% prior to the downturn, 8% back in 2000, 10% back in 1999, and staggering 18% in 1981. These levels are not mentioned to scare buyers into purchasing today, because rates are not allowed to skyrocket overnight. Instead, buyers should look at the incredible opportunity that is available today. The smart bet is to pull the trigger now while buyers can afford to purchase more of a home. Buyers who wait until sometime down the road are looking at a highly likely scenario of higher interest rates and a much smaller purchase price.
I agree with the article.
“Buyers who wait until sometime down the road are looking at a highly likely scenario of higher interest rates and a much smaller purchase price.”
what the author fails to mention is it will be a smaller purchase price for the exact same house.
What she completely overlooks is the possibility that falling affordability may mean falling prices or greatly reduced demand when today’s buyer wants to sell. It won’t feel like such a genius move if the house declines in value just because the buyer wanted to lock in a low rate.