08-15-2023, 09:24 AM
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#10 (permalink)
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Quote:
Originally Posted by vtec to vvel
https://www.cnn.com/2023/08/14/homes...ion/index.html
Home Depot’s slowing sales suggest Americans feel lousy about housing"
"Unsurprisingly, people continue to attribute the challenging housing conditions to high home prices and unfavorable mortgage rates"
Once again, media relaying bad advice. Mortgage rates are currently in the 7% to 8% range, and these rates are "unfavorable"? Remember the rates in the 70s/80s/90s, when rates were commonly in the double digits? And BTW, incomes have significantly gone up since the 70s/80s/90s. In other words, we are making more money now and with lower rates compared to previous decades, and yet, these rates are "unfavorable"? 
The rate is the rate, and this can always be re-financed when rates drop. The biggest issue potential buyers should worry about is the supply, or lack thereof. Even if a lender can offer a 0% rate, if the buyer does not have a home to lock this on, the rate doesn't benefit anyone.
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My .02 is I think extrapolation bias is playing into this on both fronts. Media is reporting, using recent data and comparing that to data from the last 2-3 years, where rates plummeted to all time lows, driving the market to be red hot. Optically, this seems to be driving their narrative. Potential buyers are also still in a "wait and see" mindset, hoping that when rates drop they will be in the aforementioned range. Unfortunately for both, rates will never hit that low again, based off of current data models, and this approach to the housing market should be adjusted accordingly. Meaning, to your point, rates are in better ranges than in previous decades with current income levels on the rise.
On a side note, I also think these headlines are on purpose, to engage interaction in order to up that ad revenue on their webpages. My .02 though, not stating fact, just opinion.
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