NICK GERLI: We have the biggest gap ever between Home Prices and Mortgage Rates in 2025. Prices are 90% above the 130-year average!
We have the biggest gap ever between Home Prices and Mortgage Rates in 2025.
Prices are 90% above the 130-year average.
Meanwhile, Mortgage Rates are right around the long-term average (6.7%).
The resulting gap makes one thing clear: home prices are too high and need to come down.
1) Particularly telling is how this Home Price bubble, in inflation-adjusted terms, is even bigger than the one in 2006.
Homebuyers intuitively know this, which is why they have stopped buying homes.
2) Mortgage rates are not what's deterring buyers from purchasing homes right now.
While rates seem high compared to where they were in the pandemic, they're not high compared to long-term norms.
3) This reality has interesting policy ramifications for the Trump administration and anyone in the housing market who cares about returning buyer demand to the market.
The focus should be on making houses cheaper.
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