D'oh!

Sometimes I lose respect for 'business reporters', who appear to be totally divorced from even Econ 101. This has come up before, of course, during the Great Recession, but it bears repeating. The housing market is driven by the population's net earnings. If people's real net income goes up, housing sellers can charge more. But, as always, there's a catch. That Catch-22 is that, to a home buyer, neither the house price nor the mortgage rate is the defining restriction. The defining restriction is the monthly mortgage payment. Some lenders check the potential buyer's financials, and have a maximum percentage of that net position as the limit on how much house that buyer can have.

The thing is: the monthly nut is a function of both price and interest rate. As a result, when one goes up, the other goes down because the slackening of the one leaves more room in the monthly nut for the other to fill. And there's no way the bank or the seller is going to leave even a buck on the table. Way back in the Stagflation of the mid-70s one could get a house really cheap since the mortgage rate was well above 10% (not the most unbiased source, but what the hell).

So, today brings this report; quel fromage!! House prices go up just when interest rates are at their ebb. Who wooda thunk it?

While mortgage rates remain at record lows, home prices are rising in more areas across the country.

Yeah, no shit Sherlock. Damn. And these knuckleheads get paid to write his drek.