bostonbubble.com

[Former Arlingtonian]

What is driving home values - Interest rates - two pictures tell the tale!

[Former Arlingtonian]

I include Case Shiller House price data for Boston, San Francisco, and Atlanta (not a high tech hub). Look at how Home prices react to changes in interest rate.


http://tinyurl.com/30yrvsHouse

[img]http://tinyurl.com/30yrvsHouse[/img]

[hopeful61]

So what does this mean for the Boston area (namely Cambridge/Somerville)? If interest rates rise will it affect home prices? Will interest rates rise before 2015?

As a long term saver and renter waiting on the sidelines, I am waiting for interest rates to rise before buying but I do worry (well, a little..) with the low inventory that if I don't "buy now" I'll be "priced out forever".

[Former Arlingtonian]

Posted: Sat Nov 09, 2013 4:59 pm Post subject: Interest rates
So what does this mean for the Boston area (namely Cambridge/Somerville)? If interest rates rise will it affect home prices? Will interest rates rise before 2015?
Response:

I'm always struck by situations that seem to make no sense. The people that say NOW is the time to buy never say the ultra low interest rates that we had earlier this year and none of them ever predicted the 30 year Mortgage rate moving up by 35% this past summer.

Read Mark Hanson commentary and the invterview with Robert Shiller and Mark Hanson. Robert Shiller and Mark Hanson both agree that Housing is very speculative at this point in time.
http://video.cnbc.com/gallery/?play=1&video=3000193241

Mark was right in 2010- does anyone remember housing double dip in prices after the tax credit program ran out??
http://www.cnbc.com/id/37575536


Mark Hanson is an expert in the field of Mortgages and the Housing Market. He thinks we have had a surge in demand and constrained inventory.

He recently summed up what has been happening with:

"Lastly, a surge of supply into a market with 10-year notes at 1.6% and 30-year mortgage rates at 3.25% — when investors and organic buyers were driven by the biggest stimulus to ever hit housing too jump all over each other and pay 15% over last price/appraised value — is a completely different situation than a surge of supply AFTER a house prices and interest rate surge, which have both done a great job of sidelining a large percentage of investors and organic buyers alike.

In short, people forget the housing market has been turbocharged by the greatest direct stimulus in history over the past 18 months. They are so accustomed to historic rates stimulus they simply don’t see it. I hear so much that the past year “recovery” has to be “organic” because the “government” is not providing any stimulus or subsidies. Perhaps, technically they are correct because the Fed is not a government agency. But when you factor in the power of the Fed buying rates down from 5.5% in 2011 to 3.25% in 2012/13 on demand and 6.5 million mortgage mods on supply you come up with a very volatile situation if that go-go-juice is ever taken away. And it was just taken away.

Real simply, the housing market “hard reset” to Twist/QE3 — rates being forced down to 3.25% from 5.55% by the Fed over a couple of months — began in late 2011. Now that this stimulus has been taken away literally overnight, housing must “hard reset” again. This “reset” will appear in the form of a sales volume/price “air pocket” through year end at least.

Bottom line: While more supply would have been great for “this” housing market a year ago, now — with far fewer buyers, prices through the roof (far more expensive than in 2003 – 2007 on a monthly payment basis), and 15% purchasing power lost in the past 2 months — it could crush it."
Find the original here:http://mhanson.com/archives/1419

[hopeful61]

Thanks. I guess I will continue renting despite risking the continued condescension of my peers and relatives. Because you know, you're not a real adult until you have a mortgage. or should it be

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