Americans spent three times their annual income for homes at the end of 2012, according to Zillow, an online real estate company.
That rate was higher than the pre-bubble standard of 2.6 times the annual income. Homes now cost approximately 15 percent more than relative incomes.
Incredibly low borrowing rates have helped push demand and create a seller's market. Now, mortgage rates are rising and it's pushing even more people to consider buying a home before rates - and prices - escalate further.
"We've seen some increase in sales because of the threat of a modest increase in rates," said Douglas Yearley, CEO of luxury home builder Toll Brothers.
Rates for mortgages increased to 4.17 percent as of June 14, according to the Mortgage Bankers Association. Rates have been propelled to the highest level since March 2012, but they still come in at near historic lows. The 30-year fixed rate mortgage plummeted to 3.47 percent just six months ago.
Homeowners looking at home renovation projects to take advantage of a seller's market should look into a home equity line of credit. This type of credit line is given to a homeowner who puts their home down as collateral for a credit toward remodeling projects, automobile payments or student loan debt.
Interest rates going up a good thing?
Federal Reserve Chairman Ben Bernanke recently stated that the increasing mortgage rates are a sign that the economy is doing better.
"If interest rates go up for the right reasons, that's a good thing," Bernanke said. "That's not a bad thing."
Industry experts like mortgage industry analyst Ric Sharga believe that higher rates could inspire banks to lend to more people.
"One of the biggest problems consumers have today is the unavailability of credit," Sharga added. "It's very difficult to get a mortgage loan. As interest rates go up, it will [encourage] the bankers to make more of these loans and it should be easier for consumers to buy the home they want."
Some markets overvalued
Trulia, an online real estate firm, noted that eight markets are overvalued compared to historical prices, incomes and rents. Those markets include California's Orange County, Los Angeles, San Jose and San Francisco; Texas' Austin, San Antonio and Houston; and Portland, Ore.
"I wouldn't be surprised if a bubble happened again," said Eileen Bermingham, a local realtor servicing the Bay Area. "It definitely has the same characteristics as the last time it happened."
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