The median rent price nationwide is now $2,000 a month. In Cincinnati, Seattle, and Nashville rents increased 30% year over year while in Austin rents increased nearly 50%. Interest rates may be up but the interest paid on renting is 100% and a mortgage payment typically locks you in for 30 years!
Rates increased about 0.25% this week as the price of Mortgage Backed Securities (MBS) dropped steeply in response to inflation reports. MBS are now treading near their recent negative trendline. Rates are up approximately 2.375% from this time last year.
Inflation – the Consumer Price Index (CPI) increased by 1% in the month of May and is up 8.3% year over year. Energy prices are up 35% this year and the average US pump price is now over $5 – a record high. This has caused airline fares to bump 38% year over year. Food prices are up 10.1% year over year which is the largest increase cine 1981. If you strip out food and energy the core rate is up 6% which is down from last month’s reading of 6.2% – food and energy pricing continue to be volatile.
Market Activity – the MBS Highway Housing index survey of 2,000 real estate professionals around the county showed that there continues to be strong activity nationwide. In the markets where activity is slowing many citied that the slowdown was due to lack of inventory. Multiple offers are still common but not as frequent as before. Demand continues to outpace supply
Home Values – Core Logic reports that home values increased 2.6% in the month of April which keeps the year over year number steady from last month at a whopping 20.9% year over year. They have now increased there forecast to 5.6% home value increase over the next year – and they have typically been quite conservative in their forecast (this time last year they predicted 4% increase…. not 21% year over year.
Future home Values – Zillows and Pulsenomics surveys 100-150 economists on their expectations over the next 5 years. Of the participants surveyed the average forecast over the next 5 years is annual growth of 4.8% for a cumulative 26.4% in 5 years. 65% of respondents do not think we are in a housing bubble and 60% see 8.5% as peak inflation.
Mortgage Applications to purchase homes declined by 7% and are now down 21% year over year. Refinance applications fell another 6% and are down 75% year over year. This report includes the Memorial day holiday so we will see if this trend for purchase applications continues.