as part of our
The housing rebound continues to ramp up at a breakneck
New data shows that home prices in 20 cities jumped 12% from a
year ago. That's the biggest annual rise since March of 2006 (i.e.
- before the housing bubble burst).
Plus, sales were up more than 2% in May, and 29% compared to
Trulia's Chief Economist, Jed Kolko, reveals that rising prices
might be short lived, however. Thanks in large part to an increase
in mortgage rates: "Rising mortgage rates will help cool down price
increases. That's because as rates rise, housing gets less
affordable - and a given mortgage payment can't support as much
That's not necessarily the case, though.
Chief Investment Strategist, Louis Basenese, does agree that
rates are on the rise. As he said earlier in June, "Four weeks ago,
the average interest rate stood at 3.71%. Now it's up to 4.14%,
according to the latest national survey by Bankrate.com."
But he also pointed out that, as rates started to rise, housing
demand wasn't affected at all! "Mortgage applications actually rose
4.7% last week," says Louis. "So the higher rates aren't derailing
demand one bit."
And rising rates aren't likely to cool demand anytime soon. Why
Well, back in 2006, interest rates stood at about 6.5%. And, as
you know, that certainly didn't put a damper on demand at the
Of course, the housing market isn't the only sector to benefit
from the boost in home prices…
As real estate value goes up, consumers become more confident
and less fearful about spending their hard-earned cash in other
As S&P Dow Jones Indices' David Blitzer says, "Rising
housing prices have increased wealth. More people own houses in
this country than own stocks, and as home prices go up, people are
richer, and they feel richer."
Are Rising Mortgage Rates Killing the Housing
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