Higher Mortgage Rates Could Revitalize Smaller Home Sales

3 Sep

The Motley Fool – Jordan Wathen

It’s a billion-dollar question: Following a 30-year bull run in bonds and falling interest rates, can the housing market survive a rising-rate environment? Rising rates have a direct impact on housing affordability. Mortgages at a 5.5% annual rate are 12% more expensive than at a 4.5% rate. At 6.5%, monthly mortgage payments are nearly 25% more costly than at 4.5% As rates go up, the amount a buyer can afford to spend on a home goes down, all else equal. But will it put a damper on a real estate recovery? Bond values weren’t the only thing going up over the last 30 years. Data obtained from the U.S. Census shows the average newly built American home swelled in size, too.

The average home built in 1975 was 1,535 square feet. By 2010, the average build came in at 2,169 square feet. What’s behind the meteoric rise in home sizes? Interest rates could be to blame. In fact, when you look at a chart of home sizes by year, they seem to be inversely related to interest rates. As interest rates fell in the late 1970s, home sizes grew. As rates rocketed in the early 1980s, home sizes contracted. After reaching a peak in the 1980s, mortgage rates have fallen precipitously, and homes have grown in almost every single year since.

>> Read more: http://www.fool.com/investing/general/2013/09/02/higher-mortgage-rates-could-revitalize-smaller-hom.aspx

Advertisements

8 Responses to “Higher Mortgage Rates Could Revitalize Smaller Home Sales”

  1. Hali's Angels Real Estate Las Vegas September 3, 2013 at 8:13 pm #

    Reblogged this on Hali's Angels | Blog.

    Like

  2. rayknowslasvegas September 3, 2013 at 8:35 pm #

    Reblogged this on Raymond Lujan | Blog.

    Like

  3. debrarossagent September 4, 2013 at 12:29 am #

    Reblogged this on Debra Ross | Blog.

    Like

  4. Louisville Kentucky Mortgage September 6, 2013 at 9:28 pm #

    Reblogged this on Kentucky First Time Home Buyer Mortgage Loan and commented:
    Zero Down Payment Loans – Information and FAQ – Zillow 2010 Census Data Implementation – Eligible Rural Area Change for Kentucky USDA and Rural Housing Mortgage Loans RHS KY

    Like

  5. Louisville Kentucky Mortgage September 6, 2013 at 9:30 pm #

    Zero Down Payment Loans – Information and FAQ – Zillow 2010 Census Data Implementation – Eligible Rural Area Change for Kentucky USDA and Rural Housing Mortgage Loans RHS KY

    Like

Trackbacks/Pingbacks

  1. Rising Mortgage Rates May Be Good For You!!! | Kentucky First Time Home Buyer Mortgage Loan - September 6, 2013

    […] Higher Mortgage Rates Could Revitalize Smaller Home Sales (mortgagenewsblog.wordpress.com) […]

    Like

  2. Higher Mortgage Rates Could Revitalize Smaller Home Sales | Kentucky USDA RHS Rural Housing Mortgage Loans - September 6, 2013

    […] Higher Mortgage Rates Could Revitalize Smaller Home Sales. […]

    Like

  3. Best Current Home Mortgage Interest Rates – 5 Insights On Finding The Best Rate | Kentucky USDA RHS Rural Housing Mortgage Loans - September 8, 2013

    […] Higher Mortgage Rates Could Revitalize Smaller Home Sales (mortgagenewsblog.wordpress.com) […]

    Like

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: