Housing Affordability Brings Market to a Standstill

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Housing affordability helps explain why residential real estate transactions have reached a standstill. Over the last five years, housing prices have surged. Per the Case-Shiller 20 City Home Price Index, home prices from 20 of the largest cities have risen between 33% and 80%. Over the same five-year period, mortgage rates jumped from 3.68% to 6.81%. Wage growth has helped to offset the higher prices and mortgage rates.

Based on housing affordability, or should we say “inaffordability”, it’s hard to see how the number of residential real estate transactions increases without much lower As always, the future of corporate profits and market performance remains unpredictable, but understanding the forces at play provides an edge. Acknowledging the interdependency of government policy, household behavior, and corporate actions is crucial for investors. The coming years may test the resilience of today’s profit levels, and prudent investors should prepare for a range of outcomes.

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