The Sky Is Not Falling. Mark Sprague’s Texas Market Update

The unemployment rate has hit a new low — 3.7 percent — that was last seen in December of 1969. Of course, things were a little different in the late 1960s. Back then you could support a family on one income and still own a house and a car. These days? Not so much.  In fact, close to 5% of the population now works two jobs.  Secondly, the average house in America cost $24,000. Mortgage interest rates were around 6.2% in 1968. This was considered to be relatively high back then. Things have changed a bit.

Yes, interest rates have increased, and the concern of interest rate increase is real, but rates are still inexpensive.  In the 70’s they were an average of 8.26%, the 80s – 12.7%, the 90’s –  8.12%, the 2000’s –  6.29%,  2010 to 2018 – 4.23%.   Will rates come down?  Let’s hope not, as that would be a sign of the economy faltering.

The good news is that in the last 50 years, buyers are carrying the least debt into qualifying for mortgages,  i.e. better-qualified buyers.  Yes, the rates creeping up will cause some buyers to buy less, but presently it has not stopped buyers from buying.  Historically, when rates move a ½ point to a point at a time is when sales slow for 60 to 90 days….then buyers jump back in, realizing rates aren’t coming back down.

Housing continues to be a seller’s market, with a lack of inventory continuing to be a problem in all price points. And home sales continue at a record pace this year.  With continued job growth, the market should remain strong, but the homes have to be priced correctly (within 5% of the median value of the neighborhood) to sell.

Any discussion of slowing of the market is not true.  Call the experts.

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