Will rising mortgage rates hurt the housing recovery?

Rising Mortgage Rates

A rule of thumb holds that every one percentage point increase in interest rates reduces affordability by 10%, so the recent move in rates just made homes about 10% more expensive to buyers who need to finance their purchase.

“There’s no one in the business right now who doesn’t think the market hasn’t taken a step back. The evidence is all around us,” said Glenn Kelman, chief executive of real-estate brokerage Redfin. The number of Redfin customers who requested tours during the last week of June was down 5% from the average for the previous three weeks, while the number of customers making offers was down by 8% and the number of new customers edged down by 2%.

A sign that inventory has picked up is that competitive offer situations are dropping. The share of offers written by Redfin agents that faced a competing offer fell to 69.5% of offers in May, down from 73.3% in April. One year ago, some 69.3% of offers faced at least one competing bid.

Markets that have seen larger increases in listings have seen even bigger declines in multiple-bid situations.

So things are slowly going to return to normal. If you have been discouraged by the difficult situation for investors, take heart- things will get better for us.

Fastest growing states

State by State housing stats

Very interesting article. Some states are growing because of oil and gas and some from manufacturing and some from immigration.

The biggest surprise to me was North Dakota. It also is #2 in the hottest real estate markets. No wonder- jobs bring people.

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