Rates rates rates rates rates rates rates

From the WSJ:

Higher Rates Aren’t Enough to Stall Housing

The U.S. housing recovery that began unfolding early last year faces its first serious test: In the span of just two months, mortgage rates have jumped by a full percentage point, something that has happened only twice since 1994.

Mortgage rates, which at the beginning of May stood at 3.59% for the average 30-year fixed-rate loan, jumped to 4.68% during the first two weeks of July, the latest available data, according to the Mortgage Bankers Association. That is the highest level in two years.

Economists say that even at a 4.5% or 5% mortgage rate, housing is still affordable by historical standards—and that rates could rise to 6% or prices could rise an additional 20% before housing would become unaffordable relative to historical levels.

The spike nevertheless represents a big payment shock for would-be buyers. Many shop for a home based on their monthly mortgage payment. The monthly payment of principal and interest—and not including taxes and insurance—on a $200,000 home with a 10% down payment just went up by more than $100, to $925, while the monthly cost of a $450,000 home just went up by around $250, to $2,095.

“That’s extremely meaningful. It is putting people on the sidelines that were really at the margins of being able to qualify,” said Ronald Peltier, chief executive of HomeServices of America Inc., which owns real-estate brokerages in 21 states.

Some agents say it’s possible that rising rates will spur purchases by dawdling buyers who had already decided they were going to buy a home. But mortgage bankers say it’s rare that higher rates actually generate net new demand.

The surge in rates could test buyers’ appetites to pay above asking prices, potentially slowing the run-up in home prices witnessed in the first half of the year. The biggest pinch will be felt by potential homeowners in high-cost housing markets that had been stretching to qualify for the largest loan possible.

“The frenzy has concluded,” said Jim Klinge, a real-estate agent in Carlsbad, Calif. “The pool of crazy buyers—those willing to pay higher prices because they’re tired of losing bidding wars—has diminished considerably.”

Does this mean the housing recovery is over? No, especially if rates rise because the economy is improving. “Prices will still go up, but it will be much more difficult to raise prices, which is a good thing because the momentum was heading for a bubble,” said John Burns, chief executive of a home-builder consulting firm in Irvine.

For now, industry executives say the biggest problem facing buyers is the shortage of homes available for sale. “I don’t think rates are going to be an issue in the near term,” said Richard Smith, chief executive of Realogy Corp., which owns the Coldwell Banker and Century 21 real-estate brands. “You’re going to continue to see tight inventory. Pricing is going to continue to go up.”

Data tracked by housing analyst Ivy Zelman show that the ratio of homes for sale as a share of total U.S. households was at its lowest level in more than 27 years during the first quarter, at around 1.5%. Over that span, prices have increased whenever that ratio has fallen below the median of 2%.

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33 Responses to Rates rates rates rates rates rates rates

  1. grim says:

    Existing homes sales due out this morning, consensus is for a strong report.

  2. JJ says:

    That article is outdated, rates have come down a lot on last two weeks.

  3. Grim says:

    4.375-4.5

  4. JJ says:

    Grim says:
    July 22, 2013 at 8:23 am

    4.375-4.5

    That is an extremely low rate historically. Plus that is 30 year rate. 15 year rate is not bad and ARMs are still cheap.

    HELOCs are still same rate. Margin is still same rate. If housing is hot folks will still buy just use other methods. Plus I think in July 2013 folks have much bigger downpayments then July 2009. First stocks have doubled, second folks are more confident about jobs meaning they feel better using more of savings and taking 401K loans.

    That is how it was in 2002-2006 even though rates were not particularly cheap.

  5. anon (the good one) says:

    @SenSanders: Richest 300 Persons on Earth Have More Money Than Poorest 3 Billion – @TruthOut: http://t.co/OvJx2rK1R4 #Poverty http://t.co/cqr0er5dRo

  6. Not Ragnar says:

    I knew you had those feelings because of where you grew up. Don’t despair the same feelings you have toward us here in Yankee liberal NJ, we do toward you retards. All I can tell you is that many Yankees have though to themselves that the greatest mistake made in this country was Lincoln fighting against the Confederates.

    The south you have been left to rot in its own juices. They would have taken Hitler’s side in WW2. They would have done proud with their own concentration camps. Remembers blacks make 30-40% of the south population, so a lot of bloodletting. They would ended up as a bigger nastier apartheid like South Africa or the reverse a Mugabe – Mozambique like, or just a plain nuked waste land. Frankly now is still a wasteland, but without radiation.

    The funny thing is that you don’t admit that you are like those immigrant you probably rail against. You come over here, probably because your first cousin was web footed or the best job you could find was as Bull Semen collector, because of course your conservative red neck ways do not produce jobs or money outside of crystal meth, moonshine, Wal Mart greeter or Bull Semen collector jobs. Then you take our Yankee liberal jobs, our Yankee liberal money, that were created because of our Yankee liberal ways and you are so high and mighty on your failed conservative red neck ways that you go on a soap box to clearly state that your conservative red neck ways are better even if all 100% is against it.

    So go on Ragnar, go back home. I heard that Bull Semen collector is not that bad once you get over the smell.

    Ragnar says:
    July 21, 2013 at 8:12 pm

    I grew up in GA and FL and still have family in both states.

  7. joyce says:

    Not Ragnar,

    Wow, did you learn to write from JJ? Or was it from a blue ribbon school?

  8. JJ says:

    The year I graduated HS US News and World reports had my HS as number 1 in the United States.

    Back then bosses did not have to spell, secretaries did it for us. Now I Have to type myself so maybe I should have paid attention

    joyce says:
    July 22, 2013 at 9:24 am

    Not Ragnar,

    Wow, did you learn to write from JJ? Or was it from a blue ribbon school?

  9. JJ says:

    .S. June Existing Home Sales Fall 1.2% To 5.08 Mln Rate

    Interesting because June you would think would be a great month.

  10. Anon E. Moose says:

    I suspect “Not Ragnar” is a product of the Hempstead School District, if not one of several just like it.

    >The Hempstead Public Schools Summer Reading List, embedded below, contains more than 30 errors, according to New York magazine. Some are pretty obvious – the author of Wuthering Heights is listed as “Emily Bonte” (and Charlotte Brontë similarly loses her “r”) while Animal Farm’s creator is “George Ornell.” The Canterbury Tales becomes singular, The Scarlet Letter is now “The Scarlett Letter,” but our favorite has to be The Great Gatsby, here listed as an improbable spinoff, “The Great Gypsy.”<

    http://www.huffingtonpost.com/2013/07/11/hempstead-reading-list_n_3581649.html

    The school district blames spending cuts, nach. The Superintendent's contract was just renewed at $220k plus other stipends would about $40k, and platinum bennies, of course. If only we spent more money on educating the kiddies.

  11. freedy says:

    http://watchdog.org/96258/17-double-dipping-nj-lawmakers-block-pension-reform/

    And the double dipping just goes on and on. Which one is the worst of the bunch?

    Just keep the property taxes going higher, so we can pay .

  12. Anon E. Moose says:

    Not Ragnar reminds of RE101 — too much of a caricature of the persona he portrays to be real.

  13. joyce says:

    (11)

    “Opponents contend hiring double-dippers saves tax dollars”

    Can we bring back public stonings?

  14. JJ says:

    220K is peanuts and Hempstead is a hell hole. You cant get anyone for that price.

    If a kids graduates on time without a record and without getting shot they did their job. Who wrote Wuthering Heights isnt an admission question on either the bloods or the cripts.

    Anon E. Moose says:
    July 22, 2013 at 11:26 am

    I suspect “Not Ragnar” is a product of the Hempstead School District, if not one of several just like it.

    >The Hempstead Public Schools Summer Reading List, embedded below, contains more than 30 errors, according to New York magazine. Some are pretty obvious – the author of Wuthering Heights is listed as “Emily Bonte” (and Charlotte Brontë similarly loses her “r”) while Animal Farm’s creator is “George Ornell.” The Canterbury Tales becomes singular, The Scarlet Letter is now “The Scarlett Letter,” but our favorite has to be The Great Gatsby, here listed as an improbable spinoff, “The Great Gypsy.”<

    http://www.huffingtonpost.com/2013/07/11/hempstead-reading-list_n_3581649.html

    The school district blames spending cuts, nach. The Superintendent's contract was just renewed at $220k plus other stipends would about $40k, and platinum bennies, of course. If only we spent more money on educating the kiddies.

  15. Lurker says:

    epic rant Not Ragnar, tell us how you really feel!

  16. Bystander says:

    And consensus was wrong Grim. Better than last year but not upward trajectory that mouthing bulls somehow thought was foregone conclusion. Simply put – jobs still stink and not enough qualified buyers to keep insanity going especially not in ny metro where we trail the “recovery”

  17. JJ says:

    or people just dont want houses. My nephew for instance is like 26 he makes like 80K a year and lives at home and Mommy takes care of him and he comes and goes as he pleases and spends his money on video games, vacations and cars. He does not even want an apt. Kids today connect via facebook, smartphone, texting, twitter etc. The also rarely date, mainly just hook ups. Commitment to them is to go in on a 1/2 share on a summer house if they are not on the lease.

    25 years ago a guy that age making a good salary had a serious girlfriend and was thinking of getting a place and maybe getting engaged in 1-3 years. That is no longer the case.

    Bystander says:
    July 22, 2013 at 12:46 pm

    And consensus was wrong Grim. Better than last year but not upward trajectory that mouthing bulls somehow thought was foregone conclusion. Simply put – jobs still stink and not enough qualified buyers to keep insanity going especially not in ny metro where we trail the “recovery”

  18. njescapee says:

    HUD’s New ‘Fair Housing’ Rule Establishes Diversity Data for Every Neighborhood in U.S. – See more at: http://www.cnsnews.com/news/article/huds-new-fair-housing-rule-establishes-diversity-data-every-neighborhood-us#sthash.MnOneSFG.dpuf

  19. Juice Box says:

    re # 18 – you can get that on city data for free.

  20. Young Buck says:

    Huh??

    “Many younger buyers have been attracted by lease deals because they can more easily understand a monthly payment and the simplicity of returning a vehicle after a set period of time — as opposed to a fixed price that is complicated by a down payment and several financing options.”

    http://features.blogs.fortune.cnn.com/2013/07/22/car-leasing-is-back-with-a-vengeance/?iid=HP_Highlight

  21. Painhrtz - Disobey! says:

    Vigoda > Farina

  22. Ragnar says:

    Younger buyers also think they own their Iphones when they are actually renting them. I wonder if younger car lessors think they can just put the car in a drawer in 2 years when a shiny new model shows up.
    Since 200

    Just paying for what you buy is too complicated a concept for today’s young, and for many of today’s Nobel Prize Winning economists too.

  23. chicagofinance says:

    Yeah….WTF??

    Painhrtz – Disobey! says:
    July 22, 2013 at 2:53 pm
    Vigoda > Farina

  24. chicagofinance says:

    Rags is not a bull semen collector….in fact as he told his future father-in-law….he got promoted after 5 years, and now he’s allowed to use a brush…..
    http://www.youtube.com/watch?v=jhm4SMlGnbk

    Not Ragnar says:
    July 22, 2013 at 9:08 am
    So go on Ragnar, go back home. I heard that Bull Semen collector is not that bad once you get over the smell.

  25. Painhrtz - Disobey! says:

    Chi figured I would beat you for once, blood clot in the lung for Farina.

  26. Anon E. Moose says:

    YB [20];

    Huh??

    “Many younger buyers have been attracted by lease deals because they can more easily understand a monthly payment and the simplicity of returning a vehicle after a set period of time — as opposed to a fixed price that is complicated by a down payment and several financing options.”

    It couldn’t possibly have anything to do with shaving a few percentage points off the monthly payment (in exchange for substantially greater back end cost risk — but the sheeple have proven real bad at gauging that anyway) or the fact that most people are too f-ing broke to afford a new car but lack the simple discipline not to spend. Just like Pick-a-payment house loans – Howmuchamonth Harry strikes again. What could POSSIBLY go wrong?

  27. joyce says:

    in moderation?

  28. Comrade Nom Deplume, Halfwit dumbass says:

    [6] not rags

    Still trying to figure out what Ragnar did to earn that diatribe. Guess I haven’t been paying attention.

    JJ enjoyed it. Finally someone who mangles the Queen’s English more than he does. I was waiting for it to devolve into Ebonics. Or coherence.

    And I have never heard anyone outside of New England address themself as a Yankee, and even New Englanders rarely use it because of the unfortunate association it might create with a certain much-loathed baseball team.

  29. grim says:

    Don’t see anything in mod, it might have just gone right into the trash. Sorry, but the spambots have been hell recently, and I’ve had to add quite a few keywords to the moderate/delete filters..

  30. grim says:

    Is it the weekend yet?

  31. Ragnar says:

    Comrade, NR freaked out when the following hit too close to home yesterday.
    I wrote this correction to Scrapple’s statement that homeowners don’t own their home until the last mortgage payment is paid:
    “Scrapple,
    Even after the last mortgage payment, NJ property tax payers are really just renting from their town governments. It’s like an HOA run by a mob that also insists on indoctrinating (aka educating) your children to think their way.”

  32. Juice Box says:

    NJ love it ot leave it, especailly if you want reform.Typical response of the entrenched gov workers on the gravy train.