The US housing market recovery is a card home ready to collapse. Flippers need to take into account the changing environment when modeling their next flip investment.
Before all Real estate flipper Jump into the comments and state why I’m wrong and how flipping is being promoted locally. I would like to explain why I think home prices are heading for a second plunge at the Marco / national level.
Reasons for House of Cards
Here are some statistics I would like to point out.
The new mortgage is guaranteed by the government and he or she is unlikely to estimate anywhere near 91.6%. Still, based on data from Inside Mortgage Finance, this is the actual number for the first quarter.
Due to the involvement of FHA and VA, the down payment required is negligible by traditional standards, ranging from 0% to 5%. According to a recent FHA report, the average down payment required for insured mortgages was just over 4% in the first quarter. A fairly cool stats category for VA, called no down payment, shows that nearly 90% of mortgages usually enjoy this status.
Housing is also quoted from the May 22 parliamentary testimony by Federal Reserve Chairman Ben Bernanke, who has played an active role in such issues: “Low mortgage rates and potential buyers. Supported by improved emotions. ” Bernanke Fed has helped push mortgage rates to low levels not seen 100 years ago through an aggressive program of buying new mortgage debt.
In addition, mortgage rates are rising. In the week ending June 6, 30-year fixed-rate mortgages recorded 3.91% in weekly profits for the fifth consecutive time. According to Freddie Mac, After reaching the highest level in a year last week. This is 18% higher than the 3.31% minimum set in November 2012 and almost 17% higher than the 3.35% rate recorded at the beginning of May. The fixed charge for 15 years also exceeded 3% to 3.03%.
How market trends will affect the future housing industry
Compared to a month ago, this increase represents an additional $ 30 per month for every $ 100,000 incurred debt. Mortgages become more expensive as interest rates continue to rise.
Today’s affordability is almost entirely dependent on low interest rates, and there is no doubt that interest rates will begin to rise in the coming years. ” Stan Humphreys, Zillow’s Chief Economist. This has an undeniable impact on home demand, as homebuyers have to spend more income to buy a home. Home prices remain stagnant while income catches up, or perhaps in some markets home prices need to fall. This is especially true in some markets where home prices are rising significantly. “
Refinancing applications are the first to be affected by the rate of increase. The Refi app has been down for the past few weeks, with last week recording a 15% decline (after considering Memorial Day) from the previous week. According to the Mortgage Bankers Association.. Mortgage applications are also starting to decline, down 11.5% from the previous week.
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