“Short of a war or stock market crash…” NIB Bed Stu Women's Yell Leather Ankle Booties in Smoke Grey Size 8REPORT SIGNATURE(FITZGARD) OVER THE KNEE BOOTS BROWN 6,6.5,7,7.5,8,8.5 , Cole Haan W05305 Womens Willette Ii Ankle Bootie, Black Suede, 10 B US , Nike Tanjun [812654-001] Men Casual Shoes Black/Black , MENS ASICS GT 1000 5 MEN'S RUNNING/SNEAKERS/FITNESS/TRAINING/RUNNERS SHOES , Reebok Plus Runner ULTK UltraKnit Black White Women Running Shoes Sneaker BS8619 , Brooks Launch 4 |Women’s US 7.5 | White/Blue | RRP $220 Running ShoesRyka Women's Sky Walk Blue/Silver Leather/PU/Fabric Sneakers , Vintage Rare Yellow Cake Loafers Black Genuine Ostrich Leather Women's Size 5 , Footprints by Birkenstock Wms Brown Leather Loafers Slides 41 US 9.5 , Anthropologie X Farylrobin Women's Rori Suede Shootie Heels Retail $148 size 8.5Womens Leather Pointy toe Mid Heel Stiletto Formal Party Shoes Sandals Cut outBUTTER, SHAMROCK PLATFORM PUMP, WOMENS, VIOLET PATENT, US 6M, NEW WITH BOXProenza Schouler 39.5 Black Leather Mules Grommets , Skechers Duck Waddle Boots Women's Shoes Size 5PROENZA SCHOULER WOMEN'S Leather Woven Fringe Slip On Sandals SZ 7.0-7.5 M D6653 , DS NIKE 2003 AIR DELTA FORCE LA COURT PURPLE 9 MAX TRAINER2012 Jordan 12.5 Prototype Player Exclusive Olympic Athlete Sample > > ike Air , Nike Lebron XII 12 Wheat EXT size 9.5 744287-700 , Nike Air Jordan 3 Retro OG Black Cement Men's Basketball US 9 BRAND NEWEastland 7871-02 Mens KITTERY 1955 Boat ShoeD US- Choose SZ/Color. , Fratelli Size 15 M Espresso Brown Leather Horsebit Slip On Loafer Mens ShoesNike Wmns FS Lite Run 4 Running Womens Shoes Blue Green 852448-400 , Puma Golf Womens Sunnylite v2 Shoe- Pick SZ/Color.Nike WMNS Air Max BW - 821956 001 9.5 new , NEW Nike Nike Moto 8 - White Running, Cross Training (Women's 6.5)Nike Air Max Sequent 3 Womens Black White Dark Grey 908993-011 Size 9 , ECCO Women's Biom Fjuel Racer Cross Trainer - Choose SZ/ColorWomens Fashion Elegant Winter Fur Trim Pointy Toe Block High Heels Ankle Boots , Lamo Ladies Wrap Booties - W1015-92

Franco Sarto Women's Highland 8 Ankle Boot Cocco 8 Franco B(M) Boot US 7e367bf - ishanyadance.com

This month, Arch Mortgage Insurance released their spring Housing and Mortgage Market Review. The report explained that an increase in mortgage rates and/or home prices would impact monthly payments this way:

  • A 5% increase in home prices increases payments by roughly 5%
  • A 1% rise in interest rates increases payments by roughly 13% or 14%

That begs the question…

What if both rates and prices increase as predicted?

The report revealed:

“If interest rates and home prices rise by year-end in the ballpark of what most analysts are forecasting, monthly mortgage payments on a new home purchase could increase another 10–15%. That would make 2018 one of the worst full-year deteriorations in affordability for the past 25 years.”

The percent increase in mortgage payments would negatively impact affordability. But, how would affordability then compare to historic norms?

Per the report:

“For the U.S. overall, even if affordability were to deteriorate as forecasted, affordability would still be reasonable by historic norms. That is because the percentage of pre-tax income needed to buy a typical home in 2019 would still be similar to the historical average during 1987–2004. Thus, nationally at least, even with higher rates and home prices, affordability will just revert to historical norms.”

What about home prices?

A decrease in affordability will cause some concern about home values. Won’t an increase in mortgage payments negatively impact the housing market? The report addressed this question:

“Even recent interest rate increases and higher taxes on some upper-income earners didn’t slow the market, as many had feared…Short of a war or stock market crash, housing markets could continue to surprise on the upside over the next few years.”

To this point, Arch Mortgage Insurance also revealed their Risk Index which estimates the probability of home prices being lower in two years. The index is based on factors such as regional unemployment rates, affordability, net migration, housing starts and the percentage of delinquent mortgages.

Below is a map depicting their projections (the darker the blue, the lower the probability of a price decrease):

“Short of a war or stock market crash…” | Simplifying The Market

Bottom Line

If interest rates and prices continue to rise as projected, the monthly mortgage payment on a home purchased a year from now will be dramatically more expensive than it would be today.

Real Estate News, , , ,
Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *