There is no shortage of pessimism in the housing market today. U.S. house prices have declined since June. However, prices are generally up year-on-year, and the market is seasonal with prices and activity typically higher in the summer and lower in winter.
Affordability is at very low levels, especially on the West Coast. We haven’t seen major house price declines yet, but there’s a fear it could be coming.
There are reasons to worry about the U.S. housing market. The dramatic spike in U.S. interest rates in 2022 is making housing affordability worse. Last year it was possible to obtain a 30-year mortgage for around 3%, now the same mortgage costs almost 7%. We’re seeing the highest mortgage rates in more than a decade.
Even aside from recent trends, house prices have climbed much faster than incomes in recent years and now mortgage costs are rising too. This means the average family buying a home today, is spending a lot more of their budget on housing costs when you factor in current mortgage rates. This trend varies by region. Houses are much less affordable on the West Coast, but affordability is far less of an issue in the Midwest.
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https://www.forbes.com/sites/simonmoore/2022/11/01/as-house-prices-start-to-moderate-how-bad-could-it-get/?sh=1e0e94854e4f