It now appears that Housing Bubble II is cooling. After the Fed drove mortgage rates down to around 3.35% in May for a 30 year fixed-rate mortgage, home prices started climbing. In the sand states of California, Nevada, Arizona, and Florida, among the hardest hit areas, home prices increased by an average of about 25%. Bloomberg reports that mortgage applications have declined 17% since May and that price reductions are occurring on 25% of listed homes. Now that the rate on 30 year fixed-rate mortgages has risen to 4.35% buyers now face a 12% increase in their monthly payments.
Housing Bubble II is Cooling
