Real Estate Economics 101
Housing bubble? What housing bubble?With the 10-year U.S. Treasury bond yielding below 4% and 30-year mortgages available at 5.6%, there isn’t a housing bubble!
Granted, there are some cities and communities around the country in which there is some serious inflation of prices. But other factors are in play in those places.
A year ago the 10 year treasury yielded 5.2 percent. Right now it's yielding 3.9 percent! So the interest rate a good borrower can get has gone DOWN from 6.3 percent to 5.6 percent! That's an 8.2 percent drop. What that means is that a home-buyer can buy that much more house than he could a year ago.
When you combine these factors with the fact that families are making more money now (therefore having more disposable income), the marketplace is adjusting its prices. Taxes are going up; building materials are going up; and home sellers are asking more for their properties. And there's no "bubble" in sight. At least for the next year or two.
Granted, there are some cities and communities around the country in which there is some serious inflation of prices. But other factors are in play in those places.
A year ago the 10 year treasury yielded 5.2 percent. Right now it's yielding 3.9 percent! So the interest rate a good borrower can get has gone DOWN from 6.3 percent to 5.6 percent! That's an 8.2 percent drop. What that means is that a home-buyer can buy that much more house than he could a year ago.
When you combine these factors with the fact that families are making more money now (therefore having more disposable income), the marketplace is adjusting its prices. Taxes are going up; building materials are going up; and home sellers are asking more for their properties. And there's no "bubble" in sight. At least for the next year or two.
posted by John and Flo Martin at 6:01 AM
0 Comments:
Post a Comment
<< Home