The following exerpts are provided by the National Association of Realtors®:
FDIC dismisses bubble fears
In its latest quarterly state banking profiles, the FDIC finds that worries about a housing bubble are mostly unfounded. In the 55 "boom" markets identified by the FDIC, housing prices are being sustained by strong growth in new jobs. Interest rates and mortgage delinquency rates are also both at historic lows, both of which are good signs. But the optimistic outlook also comes with some concerns: interest rates won't stay low forever, and affordability is becoming a problem as the gap between wages and home prices widens.
Bubble stories pop up on the newsstand
Bubble talk seems to be everywhere, at least as far as the newsstand goes. Housing prices have been the subject of cover stories in BusinessWeek, Money, The Economist, Time, and a host of other major publications in recent weeks. But with the housing market continuing to steam ahead, is the media going overboard on the topic? The Washington Post's Howard Kurtz explores the "cacophony of housing stories" in the July 4 edition.
What happens when interest rates go up?
Continuing the theme of housing prices vs. housing costs (see the previous entry, below), what might happen when mortgages rates inevitably go up? In a new report, Richard Rosen, senior economist with the Federal Reserve Bank of Chicago, takes a look at the numbers and finds that housing prices would probably decline if interest rates go up: "Even if mortgage rates rise to 7.5%, well above their 5.8% average for 2004, housing prices in most markets are likely to remain at or above their 2000 levels." But as Rosen explains, there are many factors that could change the potential impact of an increase in rates.
Have more questions about trends in the housing market? Questions about selling or buying a home? Contact me today for honest, experienced answers. Amy Blakeley, Realtor®
ablakeley at mcguire.com
(415) 296-2173 Direct