National Housing Market Outlook

It’s About Payment, Not Price!

July 28, 2011
For those consumers who are waiting to buy a home, are you aware that you could be “priced out” of the market by rising mortgage rates and tighter underwriting, even if home prices fall? Do you still want to wait?
Potential home buyers are focused on the wrong metric. They are overly focused on home price because of the tremendous correction that has occurred and the focus on home prices in the media. The media is also overly focused on price because they tend to live in the expensive markets like New York and Washington D.C. What consumers and the media are ignoring is the monthly payment, which is absolutely fantastic right now and highly unlikely to get much better. Everyone is just assuming that mortgages rates will stay low forever.
Did you know that if prices fall another 10%, but mortgage rates rise 1 percentage point, fewer people will be able to qualify to buy a house? Add to the equation the discussion in D.C. about reducing the allowable Debt/Income ratios on mortgages, and even more people will be unlikely to qualify.
If prices stayed flat and mortgage rates inched up 1 percentage point from 4.5% to 5.5%, the same house would cost you 12% more per month to buy. A movement from 4.5% to 6.5% would increase your mortgage payment by 25%. Needless to say, the impact of mortgage rates is tremendous.
Nobody knows where mortgage rates will be several years from now, but let me share with you a 40 year history of mortgage rates. Perhaps this will help you realize just how favorable mortgage rates are right now.

Building Market Intelligence™

Every week, we deliver analysis to over 40,000 subscribers with our Building Market Intelligence™ newsletter. Subscribe to our weekly BMI newsletters to stay current on pressing topics in the housing industry.

About The Author

Contact Us

If you have any questions about our services or if you would like to speak to one of our experts about we can help your business, please contact Client Relations at

Products and Services Mentioned

green check icon

Research Membership

Our research services enable our clients to gauge housing market conditions and better align their business and strategic investments in the housing industry. We provide a thoughtful and unique holistic approach of both quantitative and qualitative analysis to help clients make informed housing investment decisions.
green check icon

Real Estate Consulting

Our experienced team of consultants helps clients make sound housing investment decisions. We thrive on their success and work with many clients over multiple years and numerous projects.
green check icon

New Home Trends Institute

The New Home Trends Institute pairs design inspiration with exclusive insights into the “why” behind consumers’ housing choices. Gain exclusive insight into housing preferences and pain points through our monthly survey insights reports, webinars, and proprietary surveys of builders, architects, designers, and other industry professionals.

Latest Insights

Building Success: Doug Bauer and the Growth of Tri Pointe Homes
Dear Consultant: How will the declining birth rate impact the move-up housing segment?
Golden State Resilience: Four Considerations for California’s Housing Market