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3 charts showing that we’re not repeating the housing bubble

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Tuesday, September 27, 2022

Mortgage interest rates soar Highest level since October 2008. in the meantime, release on tuesday The FHFA Home Price Index and the S&P CoreLogic Case-Shiller Home Price Indices are Maintained near record highs.

This dynamic causes mortgage costs on newly purchased homes to explode, crowding out many prospects and housing market cools down. for example, Average monthly mortgage payment The Boise metropolitan area stock price is $2,592, up 139% from its pandemic low of $1,084.

These extreme movements will undoubtedly lead to a housing boom and The crash of the mid-2000s It was the main cause of the global financial crisis.

But at the time, there was an almost universal optimism about house prices that unduly gave way. lax lending practices When High-risk financial innovation So the towering mortgage market has become far more vulnerable than many experts thought.

Things are very different today.

First, lenders much more disciplined in their lending practices. according to New York Fed datathe majority of new mortgages in recent years have gone to prime borrowers with the highest credit scores.

Image credit: Sam Ro

Second, variable rate mortgages are nowhere popular Just like in the housing bubble. This means that few new buyers are vulnerable to interest rate fluctuations.

Image credit: Sam Ro

Image credit: Sam Ro

Third, and this is related to the chart above, about 99% of outstanding mortgages are fixed rate. Lower than current market rate, according to Goldman Sachs analysts. In other words, the majority of homeowners have been virtually unaffected by rising mortgage rates.

Image credit: Sam Ro

Image credit: Sam Ro

Federal Reserve and increasingly tight monetary policyMortgage rates are likely to remain high and housing market activity is likely to continue keep cooling.

However, it is unlikely that the housing market crash will be repeated.

Today’s newsletter Sam Lawthe author of TKer.coFollow him on Twitter. @ Samuro.

what to see today

economic calendar

  • 8:30 AM EST: durable goods orderAugust preliminary report (forecast -0.3%, previous month -0.1%)

  • 8:30 AM EST: Durable Goods Excluding TransportPreliminary August (forecast 0.2%, previous month 0.2%)

  • 8:30 AM EST: Non-defense Capital Goods Orders Excluding AircraftPreliminary August (forecast 0.2%, previous month 0.3%)

  • 8:30 AM EST: Shipments of non-defense capital goods, excluding aircraftAugust preliminary report (forecast 0.3%, previous month 0.5%)

  • 9:00 AM EST: FHFA House Price IndexJuly (forecast 0.0%, previous month 0.1%)

  • 9:00 AM EST: S&P CoreLogic Case-Shiller 20-City Compositem/m, Jul (0.20% forecast, 0.44% m/m)

  • 9:00 AM EST: S&P CoreLogic Case-Shiller 20-City Compositee, YoY, July (17.10% forecast, 18.65% previous month)

  • 9:00 AM EST: S&P CoreLogic Case-Shiller U.S. National Home Price Index (17.96% of previous month)

  • 10:00 AM EST: Conference Board Consumer ConfidenceSeptember (104.5 forecast, 103.2 last month)

  • 10:00 AM EST: Current State of Conference BoardsSeptember (previous month was 145.4)

  • 10:00 AM EST: Conference committee expectationsSeptember (previous month 75.1)

  • 10:00 AM EST: Richmond Fed Manufacturing IndexSeptember (-10 forecast, -8 last month)

  • 10:00 AM EST: new home salesAugust (forecast 500,000, last month 500,000)

  • 10:00 AM EST: new home salesm/m, Aug (-2.2% forecast, -12.6% m/m)


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