It Will Take More Than Lower Rates to Fix This

The U.S. housing market is facing a crisis... Interest rates are soaring. And that makes monthly payments more expensive for homebuyers. [Chaikin PowerFeed]( It Will Take More Than Lower Rates to Fix This By Marc Gerstein, director of research, Chaikin Analytics The U.S. housing market is facing a crisis... Interest rates are soaring. And [that makes monthly payments more expensive]( for homebuyers. This problem is so bad that lenders are offering adjustable-rate mortgages again. That hasn't been common practice since 2007... Lenders are telling homebuyers that rates will come down eventually. And when that happens, homebuyers can refinance into a fixed-rate mortgage. It seems like interest rates are the ultimate bogeyman these days. We're blaming just about everything on them. But the thing is, housing affordability isn't determined by interest rates alone. Today, I'll discuss why it'll take more than just lower rates to make housing "affordable" again. And until we cross that threshold, the housing market is in for a rough ride. Let me explain... Recommended Links: [SELL THIS DOOMED FAANG STOCK IMMEDIATELY]( Wall Street titan Marc Chaikin and world-renowned forensic accountant Joel Litman just delivered an urgent crisis warning... and shared their No. 1 step to take with your money right now to protect yourself. Plus, Marc reveals his No. 1 stock you should SELL immediately. It's a legendary FAANG stock that he says is headed for disaster. [Click here for details before today's opening bell](. [When Life Gives You a 'Fat Pitch,' Take It!]( Where the setup is so good... so lopsided in your favor... that you have to swing. It's the ONE decision that will have the biggest impact on your wealth over decades. And despite this recent market volatility, Dr. David "Doc" Eifrig has found exactly that – the "fat pitch" setup of a lifetime. [Click here for full details](. First off, interest rates do matter. A homebuyer might be able to afford a 4% mortgage. But they might not be able to afford it if the rate is, say, 6%. That's the conventional wisdom. And it's how most folks frame higher interest rates. But that argument skips something... It only works if "all else" is equal. Real life isn't a lab. All else is rarely equal. And lately, all else has been wildly unequal in the housing market. The sticker price on a home matters, too. And nearly everyone knows that we've seen a lot of price change recently. All else also includes the buyer's disposable income... With a $150,000 income, affording a 4% mortgage on a $400,000 home should be a piece of cake. But it would be out of the question if the buyer's income is only $60,000. The National Association of Realtors' Housing Affordability Index ("HAI") pulls everything together. It compares the median family income with the income needed to qualify for a standard mortgage on a median-priced single-family home. The index assumes a 20% down payment and a 30-year mortgage – two common metrics for homebuyers. And it assumes that debt service won't exceed 25% of household income. In 2019, the HAI equaled 159.7. That means the typical American family had 59.7% more income than needed. So they would be able to carry a standard mortgage. But by this past summer, things had changed a lot... Now, the HAI is a skin-of-your-teeth 102.2. Remember, housing prices have soared, too. According to the HAI, the median-priced existing single-family home jumped from $274,600 in 2019 to roughly $420,000 this past summer. That's an increase of more than 50% in three years. But at the same time, median family income lagged badly. It only rose about 13%. Make no mistake... 2022 has been brutal for homebuyers. Interest rates continue to rise. And folks got a double whammy as home prices surged. Combining rates and sticker prices, the "qualifying income" needed for a standard mortgage soared 77% from 2019 through this past summer. That's an incredible jump. Put simply, the Fed isn't the only problem here. Fighting inflation will likely make things worse, too. That weighs on disposable income. In other words, the typical American family is facing an uphill battle in the housing market. And that will likely be the case for at least a few years as these problems continue. It's no wonder real estate is the Power Gauge's most hated sector today. You'll want to steer clear of this space until we see a dramatic change. Good investing, Marc Gerstein Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 -0.48% 0 23 7 S&P 500 -0.27% 13 369 117 Nasdaq +0.04% 5 69 26 Small Caps +0.34% 183 1162 516 Bonds -2.63% Energy +1.12% 0 18 3 — According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are strongly Bearish.. Major indexes are mixed. * * * * Top Movers Gainers [rating] CF +6.10% [rating] NCLH +4.26% [rating] MOS +4.15% [rating] RCL +3.91% [rating] MPC +3.70% Losers [rating] DLR -3.98% [rating] OGN -3.54% [rating] KDP -3.51% [rating] GPN -3.42% [rating] FLT -3.40% * * * * Earnings Report Reporting Today Rating Before Open After Close CTAS, PAYX RJF No earnings reporting today. Earnings Surprises [rating] CBRL Cracker Barrel Old Country Store, Inc. Q4 $1.57 Beat by $0.19 [rating] CALM Cal-Maine Foods, Inc. Q1 $2.22 Beat by $0.26 [rating] JBL Jabil Inc. Q4 $2.34 Beat by $0.20 * * * * Sector Tracker Sector movement over the last 5 days Health Care -2.88% Staples -3.83% Information Technology -4.35% Industrials -5.95% Materials -6.67% Discretionary -6.73% Communication -6.74% Utilities -6.80% Financial -7.14% Real Estate -7.44% Energy -9.83% * * * * Industry Focus Insurance Services 2 45 5 Over the past 6 months, the Insurance subsector (KIE) has outperformed the S&P 500 by +4.34%. However, its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #5 of 21 subsectors. Indicative Stocks [rating] RYAN Ryan Specialty Holdi [rating] TRUP Trupanion, Inc. [rating] AGO Assured Guaranty Ltd * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. For questions about your account or to speak with customer service, call [+1 (877) 697-6783 (U.S.)](tel:18776976783), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice. © 2022 Chaikin Analytics, LLC. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Chaikin Analytics, LLC. 201 King Of Prussia Rd., Suite 650, Radnor, PA 19087. 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