Why It May Be Time to Walk Away from the Housing Sector
I’m sure you are not surprised to see the housing market continuing to move lower. After several strong years of recovery in the housing market, during which home prices rose and home starts and building permits moved higher, we are now facing some hesitancy in the housing market.
As many of you know, the housing market has been propped up and driven by the Federal Reserve’s quantitative easing policies. But with the easy money eventually drawing to a close, we are seeing some heightened fragility on the charts.
The reality is that mortgage rates are continuing to rise, which we know is counterproductive to any recovery in the housing market. The rate on a 30-year mortgage now sits at 4.8%, according to the Mortgage Bankers Association (MBA). Moreover, with the Fed looking at paring down its bond purchases, more upward pressure will be placed on bond yields and mortgage rates.
And you know what happens when mortgage rates rise: they kill the recovery in the housing market.
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