“Short of a war or stock market crash…” Womens Joie Fifth Avenue Designer Black 1” Heel Fashion Boots - Size 36 European , STUNNING, SOLD OUT NEW ALEXANDER WANG BLACK LEATHER & SUEDE MACKENZIE BOOTIESMan's/Woman's Givenchy Womens shoes use excellent Perfect processing , Womens MEPHISTO black / white leather cap toe ballet flats sz. 8 NEW!Skechers Women's ONE Bora Peachy Keen D'Orsay Sneaker Black/Black Canvas ShoesSoludos Women's Cherries Espadrille Smoking Slippers AB4 Blush Size 9 , SAS Black Leather Loafers Casual Shoes Women's 7S 7 SNew BANDOLINO Women Blue Suede High Heel Slip On Dress Pump Shoe Sz 9 MAnne Klein Womens hadee Open Toe Casual Slingback Sandals Black Size 6.0 , Guess Dancerr Open Toe Casual Slide Sandals, Light PinkNew Summer Hollowed-out Ankle Boots Womenthick Leather Mateen Boots Cool Fashion , Coleman Tasman Outdoor Shoes 75226 12 Medium Shoes For Outdoor Camping Hiking , Chaco Men's Everett Hiking Shoe, Sandstone, 8 M US , Adidas Solar Glide ST Running Shoes (CM8048) Athletic Sneakers Training TrainersNike Zoom Mercurial XI Flyknit Men's Red Sneakers Shoes 852616-600 SizeNike Air Jordan 4 Retro OG Shoes Size 11 White Cement Bred royal yeezy supreme , NIKE AIR JORDAN 11 RETRO XI LOW GEORGE TOWN NAVY/WHITE US 10.5NIKE AIR JORDAN XX 20 BLACK-WHITE-COOL GREY SZ 10 [310455-003] , SIMPLE 'Fathom' Men's Dk. Brown Leather/Canvas Boat Shoes Sz. 8.5 M NIB , Cole Haan Men's Tucker Venetian Slip-On Loafer Black size 10.5 US , Red Wing Water Proof work boots size 10.5 , Valentino Garavani Rock Runner Camo Sneakers NY2S0723NTA E43 AuthenticSupreme Motion Logo Vans Eras Size 10.5 Box Logo Hoodie Tee Black Red Tan , New Men's Shoes Dress Formal Cow Leather Slip-on Monk Straps Black Brown 1812533 , NEW BALANCE FUEL RUSH v3 shoes for women, Style WRUSHBK3, D WIDE, US size 61/2 , Salomon Sense Link Running Sneaker Shoe - Womens , Adidas DEERUPT Runner Shoes Athletic Sneaker Lightweight Mesh CQ2909 Sz4-12Life Stride Jamie ankle boot bootie tan brown memory foam footbed sz 10 Med NEW , Ladies Leather Tony Lama Gray/Indigo Cowboy Boots Sz:9 B (AK)Exotic Justin Mens 7 B Full Quill Ostrich Leather ROPERS Western Boots ,

Tommy Hilfiger Womens Julie Tommy Womens mogochinese-29995 Ankle Bootie- Pick SZ/Color. 7c3fdb1 - 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 *