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PaperclipPerfector  1yr ago (text post)   3985 thread views

Small-Scale Question Sunday for August 27, 2023

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I am not sure why you say that an unusually high percent of people have been unable to get a mortgage for the last ten years. It seems unlikely, given mortgage rates over the last ten years. Do you have data on that?

I am usually quite critical of not starting the y-axis at zero, but when the point is that numbers have been generally within a narrow band, starting above zero is not misleading.

I’m looking at the homeownership rates in that page and noticing the dip since 2008. Those people are presumably not holding mortgages.

This reprt shows a dip and recovery in new mortgages, but a lasting collapse of refinancing. I’m not sure if I’m reading it right.

Well, of course it is not as high as in 2008 -- The years leading up to 2008 were the subprime years, in which they were giving mortgages to anyone with a pulse. You are looking at an outlier and thinking it is the norm.

My point is that the mortgage rate is confounded by those stats.

A stable median payment doesn’t just mean that the supply and demand curves haven’t moved. It can also mean they both moved up or both moved down. As long as the shifts are similar, the clearing price will stay level, even though the clearing quantity is changing.

Given that we know the supply contracted, and the price didn’t really change, demand must have contracted too. Makes sense, as people lost their jobs or otherwise got booted from the housing market. Fewer people were willing to pay a given price. Isn’t that the definition of “unaffordability?”

In other words, median mortgage rate measures clearing price. OP was instead asking about demand.

First, we dont know that the supply contracted. Certainly not over the last ten years. See data re existing home sales and new home sales

Second, I don’t know what you mean about people losing their jobs. The trend over the last 10 years has been the opposite.

Remember, we are talking about your claim that "for the last 10 years," there has been "an unusually high percent" of people unable to get mortgages.

Right. I was referring to the first graph from that Kevin Drum article: homeownership, ages 25-34. The rate plummets after 2008 for obvious reasons. That’s the unusually high percent who are not holding mortgages.

I’m not arguing against a crash (2008) and recovery (2016). I’m saying that it makes the median mortgage payment a bad indicator of affordability. It’s “remarkably stable” even when we know the housing market is freaking out.

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