Housing prices' rise could prove to be mixed blessing | Katonah Real Estate
Home prices jumped over the past year, according to a new report, but worries are growing over whether the housing market is fading as a bright spot in the economy's murky recovery.
The S&P/Case-Shiller index of home prices in 20 U.S. cities on Tuesday rose 13.3 percent in September from the same month last year and ticked up 0.7 percent from August. But the pace of growth slowed in many places. Those gains are also a double-edged sword. Rising values are essential for the approximately 7 million Americans whose mortgages are larger than their homes are worth.
But housing affordability has suffered as a result, just as interest rates have moved significantly higher. New regulations slated to take effect in January could also make it more difficult for many potential home buyers to qualify for a loan. "It's pretty clear that the recovery in home sales has at least stalled," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics. Real estate had been a source of strength for the nation's economy after spending years in the rubble of the financial crisis.
The housing market was ground zero for the dangerous combination of insatiable demand and shady lending that triggered the country's financial crash. Many economists believe the recovery will not be sustainable until the sector is fully healed.
Analysts had predicted that rising home prices, record-low mortgage rates and growing consumer demand would galvanize the industry, rebuilding household wealth and creating new jobs.
Read more: http://www.lowellsun.com/business/ci_24632686/housing-prices-rise-could-prove-be-mixed-blessing#ixzz2mLfMmP6p
The S&P/Case-Shiller index of home prices in 20 U.S. cities on Tuesday rose 13.3 percent in September from the same month last year and ticked up 0.7 percent from August. But the pace of growth slowed in many places. Those gains are also a double-edged sword. Rising values are essential for the approximately 7 million Americans whose mortgages are larger than their homes are worth.
But housing affordability has suffered as a result, just as interest rates have moved significantly higher. New regulations slated to take effect in January could also make it more difficult for many potential home buyers to qualify for a loan. "It's pretty clear that the recovery in home sales has at least stalled," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics. Real estate had been a source of strength for the nation's economy after spending years in the rubble of the financial crisis.
The housing market was ground zero for the dangerous combination of insatiable demand and shady lending that triggered the country's financial crash. Many economists believe the recovery will not be sustainable until the sector is fully healed.
Analysts had predicted that rising home prices, record-low mortgage rates and growing consumer demand would galvanize the industry, rebuilding household wealth and creating new jobs.
Read more: http://www.lowellsun.com/business/ci_24632686/housing-prices-rise-could-prove-be-mixed-blessing#ixzz2mLfMmP6p
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