Top markets for affordable renovated housing inventory

Despite the rapidly deteriorating affordability, there is some hope for homebuyers in the form of renovated homes: properties that have been rehabbed into move-in ready condition after being purchased at auction.

HousingWire Magazine: December 2021/ January 2022

AS WE ENTER A NEW YEAR, let’s look at some of the events that we can look forward to in 2022. But what about what’s next for the housing industry?

Back to the Future of Mortgage Lending

This webinar will be a discussion on understanding what’s to come in the future of mortgage lending by analyzing past trends in the industry, evolving consumer behaviors and demographics of the industry’s production capacity.

Logan Mohtashami on Omicron and pending home sales

In this episode of HousingWire Daily, Logan Mohtashami discusses how the new COVID variant, Omicron, will impact inflation and whether or not it will send mortgage rates lower.

Real Estate

Fannie Mae economist: Rates will not halt current housing recovery

Interest rates on a 30-year, fixed-rate mortgage have risen from 3.35% at the beginning of May to 4.51% in mid-June. This 116 basis-point increase in nine weeks has raised the question whether the recent increase will stall the housing recovery, the bright spot in the economy thus far in 2013. 

In a commentary on the impact of rising mortgage rates on the housing recovery, Fannie Mae Economist Mark Palim wrote, "While there is no historical precedent for the effect on the housing market from an increase or decrease in mortgage rates due to the Federal Reserve’s policy of quantitative easing, history suggests that interest rate increases at the level recently witnessed will not stop the current housing recovery."

Palim continued to note that history shows that a rapid rise in interest rates tends to have little correlation with home prices. Rather, rising interest rates are more likely to be linked to a drop in home purchase volume and a rise in the market share of adjustable-rate mortgages. 

He added that from 1992 to today, there have been two instances where housing experienced a meaningful rise in mortgage rates over a short period of time where there has been a noticeable impact of the housing market. 

From October 1993 to December 1994, mortgage rates jumped from 6.83% to 9.20%. During this period, the rising trend in existing home sales was reversed. 

However, the impact on home prices was muted. The rate of appreciation slowed, but annually price changes remained positive, according to Palim. 

Also, from October 1998 to May 2000, mortgage rates rose from 6.71% to 8.51%. Compared to the previous report, this was smaller and more gradual. This longer adjustment period looks to have led to a more muted housing market response. 

In this instance, the pace of home sales and the rate of increase in house prices moved horizontally, rather than vertically.

"The increase in mortgage rates to date (116 bps in nine weeks) is not expected to be sufficient to choke off the housing and economic recovery. The prior periods may provide some guidance on the magnitude, speed, and duration of an increase in mortgage rates that would be of greater concern for the recovery," wrote Palim.

Most Popular Articles

Pending home sales shock 2021 housing crash bears

Pending home sales beat estimates and we can now say the 2021 housing crash bears are even worse forecasters than the 2020 housing crash bears.

Nov 29, 2021 By

Latest Articles

Fed pulling back from the MBS market cautiously

Even as it eyes accelerating tapering, the Fed continues to replace maturing assets in its $2.6 trillion mortgage-backed securities portfolio

Dec 07, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please