Announcer:
Yeah, Brandy, that’s a question I get a lot meeting with clients every day. There’s a lot of concern, just how quickly and how far things have come. There are a few indicators, data that we’re looking at, and our analysts are confirming that help give a little different story in terms of the debt serviceability that average households here in the United States have versus before that look in much, much better shape. That’s thanks in part to rising wages slightly and record low-interest rates. Low-interest rates have been a big part of things for the last, not only the last 12 to 14 months in this record run but in the previous six to seven years. So, those coupled together have given a little more stability than the numbers and the data were showing us prior to the last crisis. Okay so, some might think that this is reminiscent of the housing bubble during the mid-2000s. Is this something viewers should be concerned about?4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson:
It’s now time for 4 Your Money. We’re joined by John Nelson, financial advisor at NelsonCorp Wealth Management. Welcome back, John.
John Nelson:
Thank you, Brandy. Happy to be here.
Brandy Auterson:
We know that housing has been a hot area for the last year. What does some of the data say about this?
John Nelson:
Yes, the data certainly backs up the feeling that we’ve been in a housing boom. Perhaps one of the best sources for housing data is a graphic I have with me today. It’s a Schiller US National Home price index. And what this illustrates here, in the last 12 to 14 months, we’ve seen nearly a 19% increase in housing prices here in the US. This easily surpasses the previous high, which was 2005, which was about 15%. So, it’s not only the housing pricing, available housing inventory has hit record lows.
Brandy Auterson:
So, what about interest rates? Are there a lot of risks to the housing market, or economy in general, if they rise significantly?
John Nelson:
Yeah, there certainly would be. I think we would see a slowdown in a number of places throughout the economy if we saw rising rates. But in terms of housing specifically, I think a lot of the demand has been pulled forward. So, it would be natural for us to see a slowdown in housing just because things can’t possibly stay at the elevated levels that we are right now. So, that demand pulled forward. And the activity that we’ve seen not only recently, but over the last six to seven years at record low rates would certainly indicate a natural slow down, even if rates did not rise.
Brandy Auterson:
All right, John, thanks for joining us today.
John Nelson:
Happy to be here. Thank you, Brandy.
Brandy Auterson:
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