Mortgage Market Metrics with Barry Habib | John Burns Real Estate Consulting

Mortgage Market Metrics with Barry Habib



Truly the jack of all trades, Barry Habib has done everything from producing a Broadway show to acting, singing, and being one of the brightest minds in real estate—particularly when it comes to the mortgage sector. In this podcast, Barry Habib of MBS Highway explains the inner workings of the mortgage market. Please keep in mind that this episode was recorded in mid-April, a little over a month before it was uploaded. Barry’s insights, though, are timeless.

The Drivers of Interest Rates

  • You might see headlines like “Home prices have increased 10% while incomes have increased by only 4%. Therefore, this market is becoming increasingly unaffordable.” This is a flawed interpretation.
  • A 10% increase in housing costs does not require a 10% increase in income to maintain the same level of affordability. A 10% increase in a housing payment of $1,000 is $100. Assuming an existing income level of $5,000, an extra $100 needed for the increase in payment is only a 2% increase in income.

Analyzing Affordability (the Right Way)

  • You might see headlines like, “Home prices have increased 10% while incomes have increased by only 4%. Therefore, this market is becoming increasingly unaffordable.” This is a flawed interpretation.
  • A 10% increase in housing costs does not require a 10% increase in income to maintain the same level of affordability. A 10% increase in a housing payment of $1,000 is $100. Assuming an existing income level of $5,000, an extra $100 needed for the increase in payment is only a 2% increase in income.

A Look into His Crystal Ball

  • Interest rates will go down again in the coming years, and home values will continue to increase.
  • A recession is likely to occur in 2022 or 2023.
  • If passed, the $15K tax credit for first-time home buyers will add undue stress to the housing market, which is already oversaturated with buyers. Right now, we need more homes, not more buyers.
  • Barry does demographics too. For instance, he sees even higher levels of buyers in the coming years, since there was a spike in births 33 years ago. 33 is the median age of first-time home buyers.

For a full transcript of this episode, click here.

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Dean Wehrli If you have any questions about our podcast, please contact Dean Wehrli, Principal at (916) 647-3263 or by email.
Shelly Chen If you have any questions, please contact Shelly Chen, Consultant at (916) 753-4631 or by email.