Shiller price index

Finding the cure for the summer blues – NMP

Thomas Fuller, a 17th century English historian, once said, “We never know the value of water until the well is dry. Fortunately, the “sink” of borrowers looking to buy or refinance a home is far from dry, but it’s much less full these days.

As the summer home-buying season approaches, there are plenty of reasons to feel a little uneasy. Our industry has been doing very well for several years now, but housing waters are not as calm as they have been. Again, I am a firm believer that opportunities can be found in any market. It may take a little more work and ingenuity to find them.

Understanding Reality

Today’s challenges are difficult to define. We’ve had a long, long period of low interest rates, kept low by a global pandemic, a struggling economy and help from the Fed. Low rates combined with minimal housing inventory have pushed house prices to record highs. In fact, in March, the Case-Shiller Affordability Index reached its highest level on record.

At least during the pandemic, homebuyers were still enjoying rates below 3%. But that changed this year, when the war in Ukraine, rising gas prices and rising inflation lit a fire under rates, which soared to over 5%. And with the Fed set to raise its key rates this spring, they could go even higher.