by Calculated Risk on 4/13/2023 10:08:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Current State of the Housing Market; Overview for mid-April

A brief excerpt:

The following graph from MortgageNewsDaily.com shows mortgage rates since January 1, 2020. 30-year mortgage rates were at 6.42% on April 12th, up from 6.0% in early February, and down from the recent high of over 7% in early March - and still up sharply year-over-year.

A year ago, the payment on a $500,000 house, with a 20% down payment and 4.98% 30-year mortgage rates, would be around $2,142 for principal and interest. The monthly payment for the same house, with house prices up 2% YoY and mortgage rates at 6.42%, would be $2,582 - an increase of 20%.

But if we compare to two years ago, there is huge difference in monthly payments. In April 2021, the payment on a $500,000 house, with a 20% down payment and 3.06% 30-year mortgage rates, would be around $1,699 for principal and interest. The monthly payment for the same house, with house prices up 23% over two years and mortgage rates at 6.42%, would be $3,084 - an increase of 81%.

This increase in mortgage rates is probably the key reason new listings have declined sharply year-over-year - especially since a large number of homeowners refinanced at lower rates in 2020, 2021 and early 2022.

This is very different from the housing bust, when many homeowners were forced to sell as their teaser rates expired and they could not afford the fully amortized mortgage payment. The current situation is similar to the 1980 period, when rates increased quickly.

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/