The 23-percent spike we have seen in home prices since the housing market began to climb out of the recession is not easily explained by inventory and increased competition, as has been widely reported. According to a new report by financial service company Standard & Poor’s (S&P), mortgage rates aren’t the main culprit, either.
- Inventory and increased competition fail to explain the 23-percent spike we have seen in home prices since the housing market crash.
- Standard and Poor's report titled “The Economic Factors That Affect Housing Prices” examined the market at a granular geographic level and concluded that five variables are to be credited for the increase.
- The correlation between mortgage rates and market prices was relatively weak.
- However, in forecasting where home prices may go in the next five years, S&P suggested that investors should prepare for a 25 to 28 percent decline in home values.