*Home prices are higher than they’ve ever been, and they show no signs of stopping. The median U.S. home listing price was $405,000 in March 2022, the first time it’s broken the $400,000 price threshold, according to data from Realtor.com. That is an increase of 26.5% over two years. Homebuyers might see similarities between what’s happening today and the 2006 housing market where home prices became increasingly unaffordable until the bubble burst. Today’s market differs significantly from what happened 15 years ago, when high home prices were instead driven by loose lending practices and rampant investor speculation in the market. Here’s what is different about today’s market, what’s behind the record-high prices, and what buyers can do to navigate the process. The previous bubble came after a period in which lenders were more lax about writing loans and more people were in the housing market as an investment rather than to buy a home to live in. “Mortgage underwriting was considerably more loose back in 2006,” says Robert Dietz, chief economist at the National Association of Home Builders. “It was easier to get a mortgage to speculate in the housing market. That is not the case today.” There are two major ways homes enter the market: Somebody builds a new one or somebody sells an old one. Both of those pipelines are a bit out of whack. “Today it’s really just about lack of supply,” Dietz says.
* Home Affordability Gets Tougher Across The U.S. As Prices And Mortgage Rates Surge. ATTOM released its first-quarter 2022 U.S. Home Affordability Report Thursday, showing that median-priced single-family homes are less affordable in the first quarter compared to historical averages in 79 percent of counties across the nation with enough data to analyze. That was up from just 38 percent of counties that were historically less affordable in the first quarter of 2021, to the highest point since mid-2008, as home prices continued rising faster than wages in much of the country. “Historically low mortgage rates and higher wages helped offset rising home prices over the past few years, but as home prices continue to soar and interest rates approach five percent on a 30-year fixed rate loan, more consumers are going to struggle to find a property they can comfortably afford.”
* Mortgage Rates Grow At Fastest Pace Since 1994. Purchase mortgage rates have risen faster in the last three months than at any time since May 1994, climbing ever closer to the 5% mark due to a combination of rising inflation, the war in Ukraine, and disruptions to the supply chain. The latest weekly Freddie Mac PMMS mortgage survey, released Thursday, showed that the average purchase mortgage rate touched 4.72%, up five basis points from the week prior. A year ago at this time, rates were at 3.13%. Another index shows mortgage rates even higher. Black Knight‘s Optimal Blue OBMMI pricing engine, which considers refis and data from the Mortgage Bankers Association (MBA), reported that rates on Wednesday averaged 5.05%, up about 25 bps from a week prior. The central bank has signaled that it will raise interest rates another six times this year and several more in 2023 to control inflation, which reached the highest level in 40 years in February, at 7.9%.