The bubble is about to explode :(
"Dan North, chief economist at Euler Hermes North America, told FOX Business that while today’s hike may be priced into the market, future hikes –
of which three to four are expected this year – suggest the housing market is “entering an increasingly difficult situation.”"
"Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors (NAR), told FOX Business. “It’s not good news for consumers.”
Today's fed rate hike bad news for consumers as housing crisis persists | FoxBusine
The Federal Reserve raised its benchmark interest rate on Wednesday by one-quarter of a percentage point, which could add new obstacles for homebuyers in an already challenging housing market environment.
“Homebuyers are already being challenged because of the rising home prices – much faster than income growth – but the added push of interest rate growth is a double-whammy for consumers,” Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors (NAR), told FOX Business. “It’s not good news for consumers.”
The NAR said home prices rose in April, marking their 74th month of consecutive year-over-year gains. The median home price was $257,900 in April, up more than 5% from the year prior.
Adding higher mortgage rates to that picture could put homeownership out of reach for some buyers on the margin. A rate hike on Wednesday marks the central bank’s seventh since the end of 2015.
However, what may be more important for housing market watchers is the Fed’s future projections as it continues on the path toward policy normalization.
Dan North, chief economist at Euler Hermes North America, told FOX Business that while today’s hike may be priced into the market, future hikes – of which three to four are expected this year – suggest the housing market is “entering an increasingly difficult situation.”
The 30-year fixed mortgage rate climbed to its highest level in seven years in recent weeks. Rates rose 15 out of the first 21 weeks of this year, the largest share since at least 1972.
Higher mortgage rates could also exacerbate the inventory crunch if they deter current homeowners from selling and buying a new property at those higher rates.
