Housing is still holding the economy. It’s not like 2008

Mortgage applications are increasing, thanks to record low rates. The Federal Reserve plans to keep rates near zero for the future, which will make financing even more affordable.

“Housing is probably going to emerge as one of the winners of this crisis,” said Esty Dweck, head of global market strategy for Neti Dvesk Managers.

Dweck said, “Interest rates should continue to decrease for even longer. So I don’t expect housing to be another shoe for the economy.”

On the housing front, the index includes daily new postings Zillow (Jade) And a weekly loan application from the Mortgage Bankers Association.
One of the main reasons for the low rates is that house sales and prices continue to rise. What’s more, outbreaks of coronovirus are causing many people in big cities to pull plugs to live in apartments and buy larger homes in less densely populated suburbs.
“Rising prices are just one more reason for people to leave expensive urban neighborhoods behind,” said Redfin (RDFN) Chief Economist Darryl Fairweather in a report last week.

“The sudden rise of remote work has allowed homebuyers, who price out of a neighborhood, to expand their search to more affordable areas,” Fairweather said.

Migration to suburbs continues

Redfin said in its report that media home sale prices rose 13% to nearly $ 320,000 from a year ago – the highest price on record. What’s more, recent pending home sales growth and new home listings were their highest since 2015.

The housing market on the West Coast is particularly hot. According to data from housing market and real estate analytics firm Meyers Research, there was a solid increase in prices for new homes in Phoenix, Denver and Las Vegas in July as well as Sacramento and Riverside in California.

9th time this year - mortgage rate has fallen to record lows

Meyers Research said in a report that “low mortgage rates and a desire for more space have pushed too many residents into homeownership,” and residents in the Los Angeles and San Francisco areas are leaving for other cities.

At some point though the prices may be very high. Builders want the red-hot housing market to cool down a bit.

“Ali Wolf, chief economist at Meyers Research, said in a report,” Land is a valuable and limited commodity. Builders have to be careful to sell through all theirs.

“Today’s low mortgage rate allows builders to raise prices without crushing demand,” Wolf said.

Redfin Fairweather is also concerned that house prices may eventually be too high. This would be particularly problematic for renters who do not have the benefit of having cash on an existing home to conduct business.

“Home-price growth is making this high housing markets particularly difficult for homebuyers at first,” Fairweather said. “Price growth may slow in 2021, but even if it does, higher prices are going to continue to drive profitability for buyers.”