Housing Bubble Deflated By Rising Rates
| Yahoo! Finance (blog) | - |
As
home loan applications slide and mortgage rates rise, the housing
recovery is showing its age. Bloomberg News features a story today that
details the problems some potential home buyers are running in to across
the country.
‘Housing Bubble’ Deflated By Rising Rates
By Justin Maiman | Daily Ticker – Fri, Aug 30, 2013 12:29 PM EDT
As home loan applications slide and mortgage rates rise, the housing recovery is showing its age.
Bloomberg News features a story today
that details the problems some potential home buyers are running in to
across the country. Case in point, a Seattle couple, Amy and Ted Wilder,
who decided to put their search on hold last May because of the sudden
spike in rates. “We fell in love with a house for about $400,000 and
thought we could afford it, and then we discovered it was $300 more a
month than what we would have paid in February when we started looking,”
Amy Wilder, 42, said. “The mortgage rates just pushed it too far.”Related: Is the Housing Recovery Still On Track?
Yahoo Finance columnist Rick Newman has been tracking the rates and their effects.
"It immediately raises your out-of-pocket costs -- if you got caught in this trap where you've been looking for a house for six months," says Newman. "When you finally get the deal -- mortgage rates are at 4.5% -- you say whoa, my monthly payment just went up by a couple hundred bucks!"
So The Daily Ticker's Aaron Task asked Newman: Is the housing recovery dead?
"I hope not... we're starting to see the first signs that rising mortgage rates are, if nothing else, slowing the recovery."
[Click here to check home loan rates in your area.]
Lindsey Piegza, chief economist at Sterne Agee, has another perspective. She told The Daily Ticker that Tuesday’s S&P/Case-Shiller Home Price Index report supports the strong fundamentals she’s seeing in the housing market and that homebuyers are feeling a “sense of immediacy” to purchase homes before prices and mortgage rates rise even more.
“Demand is beginning to slow but the housing market is still very much inching its way into improvement,” she argues.
Related: How Ben Bernanke Cost Me $53,000
Watch the video above to see why Task isn't so sure that a couple hundred dollars extra a month is going to stop Americans from buying the house of their dreams.
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