Housing affordability weakening at fastest pace in a quarter century

[saidsimplesimon]

https://www.msn.com/en-us/money/markets/housing-affordability-weakening-at-fastest-pace-in-a-quarter-century/ar-AAvQPbw?li=BBnbfcN

Housing affordability weakening at fastest pace in a quarter century
CNBC Diana Olick

It is the perfect storm: Rising home prices, rising mortgage rates and rising demand are colliding with a critical shortage of homes for sale.

And all of that is slamming housing affordability, which is causing more of today's buyers to overstretch their budgets. This year, affordability – a metric based solely on the amount of the monthly mortgage payment – will weaken at the fastest pace in a quarter century, according to researchers at Arch Mortgage Insurance.

The average mortgage payment, based on the median priced home, increased by 5 percent in the first quarter of 2018 nationally and could go up another 10 percent to 15 percent by the end of the year, according to their report.
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With no relief in either inventory or home price appreciation in sight, the housing market is likely to become even more competitive this year.

At some point, however, there will come a breaking point when sales slow, which is already beginning to happen in some cities. Home prices usually lag sales, so if history holds true, price gains should start to ease next year.

[padfun]

1. Those of us who got a low interest rate...

are fortunate for now. I will not refinance my loan anytime soon. If I do need extra money, I would get a second, but I don't think I will need one any time soon (knock on wood.)

I have a feeling we will be seeing interest rates climb quickly, like it was in the mid to late 70's. Home values will go up, but any loans from them will come with a high interest rate. Long term, I think we will be going back to the "normal" 6-7% like it was in the 80's and 90's.

[saidsimplesimon]

2. Rising interest rates

seem inevitable for the short term. I hope everyone is keeping debt to a minimum.