Most planets orbit the Sun along the path of an ellipse. Astronomers describe the elliptical path of planets as “eccentric”. In other words, an eliptical orbit is squished.
Mercury (the planet, not the element) has the most elliptical orbit. The planet’s distance from the Sun vary’s by 50% throughout its orbit. By comparison, the Earth’s orbit has an eccentricity of about 3.4%.
The American housing market is much more like Mercury than Earth.
Since the mid-1990s, the U.S. housing market has mimicked the eccentricities of Mercury. From extreme heat at perihelion to cooler respites at aphelion, the housing market is cyclical. Although not as predictable as the ancient orbit of a planet, the cycle of housing is consistent. The variation is only in the triggers that drive prices up and down.
At this moment, the housing market is rocketing away from its most recent source of heat — extremely low mortgage interest rates. The trip, however, is not one-way. Like an orbit, the path of interest rates is elliptical. Whatever the triggers may be to change the direction of mortgage rates, the path of those rates is most certainly not forever upward.
