This past week home loan rates ticked up, yet remain just above 3-year lows.
Here are 3 reasons why:
Solid corporate earnings and future positive guidance from many public companies were a pleasant surprise for many who were bracing for a far more disappointing outlook. As a result, Stocks moved higher last week at the expense of Bonds and home loan rates.
U.S./China trade deal optimism continues. It's been slightly over a week since the U.S. and China came to a "handshake" trade agreement, and all signs are pointing to the deal being papered and signed in the coming weeks. This once uncertain event has become quite positive, and was another reason for Bonds to move lower and rates higher.
No one knows for sure when the next recession will occur. What is known, however, is that the upcoming economic slowdown will not be caused by a housing market crash, as was the case in 2008. There are those who disagree and are comparing today’s real estate market to the market in 2005-2006, which preceded the crash. In many ways, however, the market is very different now. Here are three suppositions being put forward by some, and why they don’t hold up.
A critical warning sign last time was the surging gap between the growth in home prices and household income. Today, home values have also outpaced wage gains. As in 2006, a lack of affordability will kill the market.