Arbor Square is a well established neighborhood and been the place many call home in the past few years. It continues to be a great selling community. Located just off Highway 51 in Madison, Arbor Square is conveniently located to shopping and schools. Average list price is $200,000 and average square footage is 2000 sq.ft.
List of schools for Arbor Square
Madison Avenue Elementary (K-2)
1199 Madison Avenue
Madison Avenue Upper Elementary (3 – 5)
1209 Madison Avenue
Madison Middle School
1365 Mannsdale Road
200 Crawford Street
Madison, MS 39110
Madison Central High School
1417 Highland Colony Parkway
We examine the impact of mortgage rates and house prices on the number of renters qualified to buy to show that lower mortgage rates, rising incomes and changes in house prices have affected the number of renters who could qualify to purchase a median-priced home over time.
We look at the impact of mortgage rates ceteris paribus, a latin term used in economics that means “holding everything else constant.” In this case, we’re going to use the same income distribution, home price, and down payment requirement, but we’re going to change the mortgage rates to see what happens to the number of renter households who qualify to purchase the median priced home.
The table below shows the results of our thought experiment. While 20 million renter households qualify based on income to purchase the median-priced home in 2012 at prevailing mortgage rates, that figure would decline if interest rates were to rise.
If rates were to return to 5 percent, only 17.6 million renter households would have income sufficient to qualify to purchase the median-priced existing home. A rate increase to 7 percent causes increased monthly payments of $280 per month, and an additional $13,400 is needed to qualify to purchase this home. That type of rate increase would knock nearly 6 million currently qualified renter-households out of the market
What is the likelihood of increasing mortgage rates? In our current forecast, NAR Research expects mortgage rates to begin to creep up but still remain below 5 percent through the 2014 forecast horizon. Mortgage rates bottomed in November/December 2012 at 3.4 percent for 30-year fixed-rate mortgages. Over the most recent 15 years, rates have ranged from 3.4 to 8.5 percent and averaged 6 percent as seen in the chart below.
One note about the above calculations. They assume that potential buyers meet credit qualifications and have sufficient cash on hand to close a transaction. Lending standards, credit quality, and access to funds will affect the number of households who will ultimately be able to buy a home.
In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses new home sales.
New home sales inched higher in March, now running at 18 percent above one year ago. But the figures remain way down from peak levels. A lack of new home construction has prevented new home sales from rising even higher. Inventories of newly constructed homes for sale are essentially at 50-year lows. The lack of supply in relation has pushed up the new home prices in the first quarter to an all-time high, even above the levels seen during the bubble years.
The newly constructed home market makes up only 8 percent of the overall home sales market, with the remaining 92 percent being existing home sales.
The price gap between new and existing homes remain very wide compared to historical norms. Even though existing home prices are recovering, the new home prices have to keep pace with construction and material costs. The large gap also points to the relative attraction of existing homes and a plenty of room for further price improvements in the near future.
Homebuilders clearly need to get busy. Those large builders who can tap Wall Street funds or have a reserve of cash are able to purchase lots and start building. However most homebuilding activity in America has traditionally been performed by local small-time builders working with local community banks. Unfortunately, the small guys are shut out because of the difficulty of obtaining construction loans. Onerous regulatory burdens are said to prevent local community banks from providing the construction loans. Meanwhile, the stock prices of those big builders have been racing to the top.