Tuesday’s release of the S&P Case-Shiller home price index shows the housing market is heading back down after several months of growth this summer:
Turns out the active market, particularly the new sellers entering the market each week have been screaming about this since July. If you want to know about the condition of the housing market, ask the sellers that enter the market each week – they’ll tell you exactly how the market is doing:
Median Price of New Listings as of December 1, 2010
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Ahhh…and I was just about to loosen up my seatbelt! You know what's interesting though, since the interest rates have been creeping back up over the past 5 weeks, my active buyers are becoming more motivated! Could the increasing interest rates actually help support the home pricing index?
That's very much a possibility. Sometimes perceived scarcity, in this case the scarcity of low rates, can drive demand. Smart homebuyers know that they aren't paying a price for a house, but are making payments. Even if home prices fall a little more, a hike in mortgage rates could lead to higher monthly payments for that house.
This is a great point, Scott. I sometimes speak to my buyers when showing houses about the significance of their mortgage interest rate that they will soon lock. Emphasizing that the house price is not the only factor to consider as part of their financial landscape. Thanks!
The big question is how will rising prices of basic necessities such as food, fuel, education and healthcare costs impact housing prices. It seems to me that the Fed's efforts at re-inflating the economy will only make it more difficult for many people to keep up with their mortgage payments.
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