What will my monthly mortgage payment be? “Rising interest rates from 3% to nearly 5% over four months, that has helped push some competition to the sidelines,” said Mike Maher, co-founder and CEO of Houwzer, a real estate brokerage. Housing experts note that the exuberance in the housing market was also fueled by mortgage rates that were too low for too long as a result of the Federal Reserve Bank’s monetary policy.Īs rates rise, they say, demand will fall off. “People associate the American dream with working hard and owning a home and it seems increasingly out of reach or unattainable.” “Prices rising this much is not healthy,” he said. This is not sustainable, Yun said, and the result is an increasingly inequitable housing market in which fewer people can own homes and first-time buyers are priced out entirely. “People’s incomes have not risen to the degree that prices have risen and the cost burden of ownership has been drastically increased,” he said. The typical home has seen a 40% increase in monthly payments over a year ago, said Yun, with a roughly 20% increase in home prices and another 20% in higher mortgage rates. “All the metrics related to income and affordability in housing appear out of sync and the strange movement in the data is really caused by lack of supply,” said Lawrence Yun, chief economist at the National Association of Realtors. The persistent lack of supply in today’s market combined with surging demand is driving up prices and pushing more prospective buyers to the sidelines. So what does a potential bubble mean for homebuyers and sellers? “Reasons for concern are clear in certain economic indicators … which show signs that 2021 house prices appear increasingly out of step with fundamentals.” “Our evidence points to abnormal US housing market behavior for the first time since the boom of the early 2000s,” researchers at the Federal Reserve Bank of Dallas wrote in a blog post last week. A single-family home for sale in Washington, DC, USA, 18 February 2022.
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