The Ups and Downs of Real Estate

When it comes to housing affordability, supply and demand and interest rates have to be factored in.

The Law of Supply and Demand Has Not Been Repealed

• As affordability drops, the number of qualified buyers declines
• The decline in buyers means a reduction in demand
• With the reduction in demand, the supply of homes for sale (inventory) will increase
• As the inventory grows and prices drop, buyers become more reluctant to buy

Household incomes and median home prices move in parallel

• Since 1981, household incomes have increased at an average annual rate of 3.6%
• During the same time period, median home prices have increased at 4.8% per year

Home prices have outpaced household income by an average of 30% a year nationally!

Mortgage Rates: Low and Stable

• Interest rates are near the lowest point they have ever been since 1970
• During the past 10 years the rates have been at or under 8%
• For the past 5 years they have stayed at or near 6% and show no signs of rising

2007 Real Estate 2008

• Part 1
• Part 2
• Part 3
• Part 4
• Part 5
• Part 6

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