Housing Prices Continue Slide

Housing prices continue to fall, and interest rates are above 5%.

Will rising interest rates keep buyers away or make buyers act fast before rates go even higher?

My thought is that rising home prices need rising wages for workers. We are still in an environment where companies aren't hiring. Profits are up, but there hasn't been a need to increase payroll or compete for talent with higher wages and benefits.

Until people have more money to spend, they won't be chasing home prices. In addition, people were recently stung with bear markets in housing and stocks. Who could blame anyone for waiting for a better deal rather than chase prices higher?

Rising Interest Rates and Housing

Here we have some comments on the impact to the housing market from rising interest rates. Doesn't look too good for the subprimes! And it also doesn't look good for the summer selling season.

clipped from thehousingbubbleblog.com “The biggest topic of the week has to be the massive jump of the yield on the 10-year. The last hope of the housing market was the dream that the Fed still had control of the situation and could lower interest rates. This would set everything right in the minds of fanatics such as David Lereah, Leslie Appleton-Young and Lawrence Yun.” “Raising interest rates will kill whatever is left of sub-prime and Alt-A craptacular real estate lending. Rates go to 7% and bye-bye any real estate recovery at these bubble prices. Prices must and will fall.” The Contra Costa Times. “Investors’ expectations of an interest rate cut, and home buyers’ hopes for cheaper mortgages, seem to be disappearing. Some market watchers say the yield is likely to climb higher as bond prices weaken, making it even harder for consumers to finance home purchases and for companies to borrow money.”