Home prices have skyrocketed past what many potential U.S. homeowners can afford and that’s what’s stalling the housing recovery, not rising mortgage rates, according to Heidi Moore, an editor at The Guardian.
Banks are blaming rising interest rates for the low mortgage activity and their layoffs of mortgage pros, but, Moore points out in a blog post, “what is wrecking the recovery is that house prices are rising faster than the ability of people to afford them.”
The narrative that rising rates is stalling the housing recovery is wrong, she writes, because rates are still below where they were when homebuying was at its peak in 2006 when incomes were relatively higher than they are today.
The problem, Moore points out, is a sluggish economy and personal incomes that have not tracked with housing prices that have risen 12 percent in the last year.
Source: The Guardian