Settlement Risk: The Current State of the Housing Market: Mid-March Review

To Estimated risk per 15.03.2023 12:14:00

Today in the Calculated Risk Real Estate newsletter: The current state of the housing market; Review for mid-March

Brief excerpt:

The following chart from MortgageNewsDaily.com shows mortgage rates since January 1, 2020. On March 14, 30-year mortgage rates were 6.75%, down from 6.0% in early February, down from a recent high of over 7.0% – and still up sharply from last year.

Mortgage ratesA year ago, paying for a $500,000 house with a 20% down payment and a 30-year mortgage rate of 3.76% would have been about $1,855 for principal and interest. The monthly payment for the same house with a 3% year-on-year increase in house prices and 6.75% mortgage rates would be $2,672—a 44% increase! Monthly payments are still up sharply compared to last year.

There are always people to sell to; death, divorce, moving in search of work – these are some of the reasons. However, homeowners with a low mortgage rate will be reluctant to sell and then buy a new home when their monthly payment for a new home is much higher. The sharp rise in mortgage rates is likely the main reason for the sharp decline in new offerings compared to last year.

This is very different from the housing downturn, where many homeowners were forced to sell properties as their teaser rates expired and they couldn’t afford the fully amortized mortgage payment. Current situation similar to the 1980 period.when rates were rising rapidly.

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