housing

More Money, No Houses

I still get the most questions about what is going to happen to the residential real estate market. As I have stated since March, it’s going to be OK. Here’s another reason why: You can afford 12% More house today because of rates.

Here’s a graph of 30-year mortgage rates. I’ve then graphed how much of a house you could afford relative to a $500,000 house a year ago.

As you can see, instead of a $500,000 house, you could get a $565,000 house today.

You main problem? There is nothing to buy. Many markets have almost no inventory available.

Yes. The last recession housing prices crashed. This is not the last recession. Housing is going to be strong given low rates and no inventory.

By Christopher Schwarz, ago

Mortgage Apps are Moving Up!

As I discussed a few days ago, housing price appreciation is accelerating. I expect this trend to continue as inventory is low and demand is high. More evidence of demand? Mortgage purchase apps continue to growth.

Here’s a graph of the year-over-year change in the MBA Purhcase Application Index.

Year-over-year Change in Mortgage Purchase Applications

The Fed has done its job – lowered interest rates and goosed demand. We’ll see what happens to prices as the summer goes on.

By Christopher Schwarz, ago