The Market has Seen Rising Rates Before BUT Never so Far so Fast

Dire Predictions For Philadelphia Housing Recovery

• The market has seen rising rates before, but never so far so fast
• Short Term impact in sales: The spike is causing a sense of urgency now, a rush to buy before rates go higher
• Home sales and home prices will both come down if rates don’t return to their lows, and the expectation is that they will not
• When the $8,000 credit went away: New home sales fell 25 percent year-over-year, and existing home sales fell 24 percent year-over year
• Increased contract cancellation for buyer’s that did not lock in thier rate
• Mortgage applications have been falling for the past month
• Applications to purchase a home are down 28 percent in the past month and up only 4.5 percent from a year ago. They should be up far higher, given that prices and demand are rising so fast
• Mortgage rates going from 3.5 to 5 percent is roughly a 15 to 20 percent decrease in what the average buyer can afford
• Rising rates are the number one worry for the majority of buyers right now

But to keep in prespective interest rates are still near historic lows. Unless employment and incomes increase it will be harder to keep a strong demand in housing purchases if interest rates continue to rise.  To read more