Rising prices have put a pinch on people looking to get into existing homes. That's the word from an economist who works with Wisconsin realtors.
Professor David Clark says a measure of housing affordability as slipped dramatically in the last year and a half, largely due to the number of homes available for sale has diminished. He says the Housing Affordability Index looks at the median priced home, the qualifying income to purchase a home at current interest rates assuming a 20 percent down payment on a 30-year fixed-rate mortgage.
He says the Index has fallen in the past year...
"...We can look at the fact that mortgage rates have gone up. They're up about a half-percent compared to last year. Prices have gone up at close to twice the rate of inflation...."
Clark says incomes have not gone up enough to make up the difference in the increased costs. He says they expect mortgage rates to rise. The Federal Reserve is concerned about higher inflation. He says inflation has been over 2 percent since last year. He says the June inflation rate was about 3 percent.
He says because the fed will likely increase short term borrowing rates which will eventually affect long term rates, like for mortgages.