“Short of a war or stock market crash…” Rag & Bone NWT Black Suede Fringed & Tasseled "Ghita Moccasin" Boots SZ 7Mongrel work boots Wheat High leg Zipsider boot size 8.5Made in Italia MARE-MARE-NAPPA_NERO ballerina shoes Women's - colour Black USSkechers Womens Sure Track Erath Leather Slip Resistant Work Shoes , New Prada AUTH Logo Canvas Espadrille Flats Natural Beige Size US 6.5 , Ann Taylor Blue Calf Hair Wedge Heels Size 11 , New In Box & Other Stories Block Heeled Sandals Light Orange/ Nude Color , Keen Dauntless Posted Sandals - Women's Size 5.5, Burnt Olive/Teal , New Mens Nike Zoom LJ 4 Long Jump IV Spikes Shoes 12.5 Blue White 415339-41332 Nike Mercurial Victory VI CR7 IC Indoor Soccer Shoes Green Volt 852526-376 9New Adidas EQT Support Ultra - Size 8 - White - BA7474 - *Boost*New Balance M586DB 586 JP Japan Exclusive Dark Brown Men’s US size 9 27.0 , Nike Odyssey React AO9819-010 Men's Sizes US 7 ~ 15 / New in Box!!!Adidas Original Samba FB Burgandy Gold Shoes Size 9 , Nike Air Max 1 Flyknit Royal x ARTHUR HUANG (923005-001) US10.5PF FLYERS MC2002SL CENTER LO Mn's (M) Black/Black Canvas Skate Shoes , Crocs Men's Santa Cruz Playa Slip-on Loafer,Graphite/Light Grey,10 M USClarks Men's Cloud Steppers Votta Edge Sneaker Shoes, Blue/White, 7M USALLROUNDER by Mephisto Black Leather Sneaker Tennis Shoes Men's US 10.5 (C5)Paperplanes Sports Air Running Trainig Comfort Athletic Shoes_PP1339 BrownSANO by MEPHISTO White RAPTOR Leather Sneaker Walking Shoes Size US 13 M , Florsheim Market Slip On Black - 9 3E - NIBSkechers Sport Womens Flex Appeal 2.0-High Card Sneaker- Pick SZ/Color. , Brooks Womens Pureflow 5 Womens Running Shoes Gray Pink Size US 6.5Ahnu Montara II Hiking Shoes, Women's Size 9, BrownMINT 1970s FLORSHEIM IMPERIAL BROGUES Brown Size 11.5 D V wedge, refurbished , MAISON MARTIN MARGIELA crushed crystal shoes smashed rhinestone sneakers 35 NEW , Rebecca Minkoff M285007 Womens Blair Emboridered Fashion SneakerPleaser COURTLY-3005 Women's Sexy Black Nylon Stretch Pull-On Thigh High BootsBlondo Waterproof Liam Suede Block Heel Zip Ankle Bootie Black Size 7.5 M $149 ,

Women's NIKE Flex Running 2016 Running Cross Training 25705 Shoes Size Shoes 6.5 (844741-999) 06f8fc7 - 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 *