Housing Market Cooldown — Data last week showed us a few things about the health of the economy, including a much-needed slowdown in the housing market.
Refinancing applications are down significantly year-over-year, and logically so, given that the 30-year fixed APR hovered around 5.10% - 5.25% at the end of the week last week.
There’s a great tweet floating around that talks about the increase in the average home price and 30-year fixed interest rate from Jan 2021 until now. Basically, the average monthly payment has almost doubled since then.
This is absolutely unsustainable. There’s no chance of having a middle class when the median income versus median home price keeps trending how it has moved in the last 18 months.
Do we think that there is a 2008-esque mortgage-backed crisis looming? Nah, not unless you’re passing out NINJA loans to the jobless. We’ve all seen The Big Short; we’re not there yet.
We are seeing a noticeable slowdown in housing sales. There was a 9% year-over-year slip in home sales as of April, and we are probably going to see this number increase through the summer.
I challenge you to conduct your own incredibly scientific study: take a look at your local housing market using the Zillow app. Look at it in map view. Set some arbitrary but inclusive parameters on your search. Take a screenshot of the map view.
Then, at the beginning of August, run the same search. If I were a gambler, I would bet that the inventory level for your search parameters will probably be higher in a few months, particularly as rates rise and homes get relatively more expensive.
That being said, this is obviously a non-scientific method to gauge your local housing market. I’m not a gambler, and this isn’t financial advice.
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