There are several signs that affordability could increase rapidly in the coming months.

• Falling Interest rates – According to the National Association of Realtors a 1% drop in interest rates increases buying power by 10%. In the last 3 months interest rates have dropped .32% – theoretically a 3.2% increase in buying power.
• Inflation appears to be contained. Treasury bulls are betting big on it. Consumer prices appear to be in decline globally as well.
• Some markets are still appreciating rapidly.
• Even in the face of rising interest rates home have been holding their values
• Some analysts are predicting an additional 28 bps drop in the 10 Year’s yield which would increase the downward pressure on interest rates significantly.
• The US central bank has pursued a policy of “asset targeting” since 1999, adjusting short term interest rates in response to movements of stock market indexes and housing prices. This is further evidence that the Fed could start lowering rates soon as more news of a slowdown in the stock market and housing continue.