Here’s a truly amazing historic corner unit loft just listed with extra large windows, natural light, views, underground parking and amenities. But can I afford it?  Mortgage interest rates have gone up by more than half a point since the beginning of 2018. They’re projected to increase by an additional half a point by year’s end. Because of this increase in rates, some are guessing that home prices will drop.  #textileloft #interestrates

However, some prominent experts in the housing industry doubt that home values will be negatively impacted by the increase in rates.

That large one bedroom loft in the Textile building is located in the Fashion District. This condominium home is 890 square feet, features high ceilings, original industrial windows, a half-wall partitioning bedroom area, stainless steel Bosch appliances, full laundry closet with stacked washer/dryer, central air and heat, stylish upgrades and a creative design.  Take a look!

Mark Fleming, First American’s Chief Economist:

“Understanding the resiliency of the housing market in a rising mortgage rate environment puts the likely rise in mortgage rates into perspective – they are unlikely to materially impact the housing market…

The driving force behind the increase are healthy economic conditions…The healthy economy encourages more homeownership demand and spurs household income growth, which increases consumer house-buying power. Mortgage rates are on the rise because of a stronger economy and our housing market is well positioned to adapt.”

Terry Loebs, Founder of Pulsenomics:

“Constrained home supply, persistent demand, very low unemployment, and steady economic growth have given a jolt to the near-term outlook for U.S. home prices. These conditions are overshadowing concerns that mortgage rate increases expected this year might quash the appetite of prospective home buyers.”

Laurie Goodman, Codirector of the Housing Finance Policy Center at the Urban Institute:

“Higher interest rates are generally positive for home prices, despite decreasing affordability…There were only three periods of prolonged higher rates in 1994, 2000, and the ‘taper tantrum’ in 2013. In each period, home price appreciation was robust.”

Industry reports are also calling for substantial home price appreciation this year. Here are three examples:

• The Home Price Expectation Survey says that prices will appreciate by 5.8% this year.
• The Freddie Mac Outlook Report is looking for home prices to appreciate by around 7% in 2018.
• The CoreLogic HPI Forecast indicates that home prices will increase by 5.2% on a year-over-year basis.

Bottom Line

As Freddie Mac reported earlier this year in their Insights Report, “Nowhere to go but up? How increasing mortgage rates could affect housing,”

“As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”