House price growth at the US market exceeded wage gains during six years. Today houses are staying on the market not for days or weeks, but for months. Mortgage rates are growing, and first-house buyers cannot afford it anymore. This is how US market looks like today.

According to S&P Corelogic Case-Shiller 20-City Composite Index, house prices grew by 60% since March 2012, while wages gained only 30%. Average mortgage rate grew from 3,85% in the beginning of this year to 4,74% by now. It will rise more next year. Each half percent increase means reduction in price by $25000 and house area by 200 square feet.

Rates increase hit first house buyers the most. This is why they were in a hurry to make a purchase in the beginning of this year.

However, interest rates are only a part of story. Areas with high taxes, such as Chicago, New York and New Jersey, capped the amount of state taxes and mortgage rates that can be written off ats federal returns. As a result buyers are moving to such states as Florida, which does not have state income tax.

The biggest price growth is observed in cities, where demand depends on how well shares of largest employers perform. Stocks of Amazon, based in Seattle, gained more than 900% since first quarter of 2012 until September’4 of 2018. Prices of houses increased by two times. However, now the stocks lost 20% since the beginning of September, and the situation is changing. Prices of homes show decline.