Wednesday, May 11, 2011

House prices and interest rates


The February value of the index was 153.  The 30-year mortgage rate is about 4.7 percent.  If and when long-term interest rates go up just 150 basis points, housing prices in aggregate might be expected to take a further hit in the neighborhood of one third.

Here is the chart for the Composite-US series beginning in 1987.  A rise in mortgage rates to 6 percent would imply a further 20 percent fall in house prices.  And that assumes no overshooting.


As says, now is not a good time to buy a house. 


P.S.  Having just had the opportunity to compare OSX and Windows 7 directly and to get my new computer tweaked to my liking (I deleted all Dell’s bloatware) I must say that Win7 is a pretty good imitation of OSX.  Taskbar = dock, lots of graphical niceties, and with 8 gig RAM and a quad-4 CPU, Win7 does its “ontogeny recapitulates phylogeny” schtick pretty quickly and without too many annoyances.  So convergent evolution appears to have worked okay in this instance.

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