Yahoo Finance Live's Rachelle Akuffo, Brad Smith, and Emily McCormick examine the dip in mortgage rates, the record amount of homes worth at least $1 million, housing wealth dispersed through high-income homes, and the rise in average home costs.

Video Transcript

BRAD SMITH: Welcome back, everyone. New data from the Mortgage Bankers Association today revealed a decrease in mortgage rates, one measure that the Association uses to monitor mortgage loan. Application volume increased 8 and 1/2% week over week on an adjusted basis.

Joel Cohen, who is the Mortgage Bankers Association associate vice president of economic and industry forecasting, said in the data release that mortgage rates dropped for the first time in 12 weeks, as the war in Ukraine spurred an investor flight to quality, which pushed US Treasury yields lower. This prompted them to take a holistic look at the state of home ownership, as it does us as well.

And so the big question here, why are people seeking any type of refinancing option possible? Well, it starts with home prices. There's a new data out from Redfin. They reported a record 8% of US homes are worth at least $1 million. And I want to open up this conversation with the very prices that we've seen amass both on the existing home sales side and even on the new home sales, where you don't even know when those homes will be delivered in some of those new home sales side of the equation.

RACHELLE AKUFFO: I mean, I think--

EMILY MCCORMICK: Well, absolutely--

RACHELLE AKUFFO: Go ahead, Emily.

EMILY MCCORMICK: Go ahead, Rachelle. OK, well, I think one of the things about the price increases that we've seen across the housing market is the fact that we have seen the share of this wealth really being consolidated among the highest income earners across the US. And to that point, I do want to bring in some data on the housing wealth distribution that was just released from the National Association of Realtors earlier today as well, showing that for the decade 2010 to 2020, 71% of the increase in housing wealth was gained by high income households.

And the share of housing wealth held by high income versus middle or low income homeowners has also yawned further. And to that point, high income homeowners had 28% of all US housing wealth in 2010. That share was up to 42.6% in 2020. So we are really seeing this again and consolidated at the top here.

So yes, we are seeing these home prices increasing, which is great if you're already a homeowner and have that asset on your home's balance sheet. But at the same time, it does beg the question of if you're trying to be a first-time homebuyer and actually get into this market and grow your wealth and grow the assets that you have on your own personal balance sheet, where does this leave a lot of the everyday Americans?

RACHELLE AKUFFO: And honestly, I feel like they're being squeezed at both ends because you can't afford-- there's not even enough inventory for you to get into a new house. And even if you can, as you mentioned, you can barely afford it. The National Association of Realtors there saying that housing wealth increased by $8.2 trillion over that decade. And as you look at it, it's concentrated at the top, and you wonder where everybody else is.

So it's no wonder that people are trying to scramble and perhaps refinance what they already have, as they see house prices going up and they see interest rates might be going up as well. With high inflation, you don't know how much more you're going to have to pay, so people are really having to, like, dig into their budgets and figure out how much house can I really afford at this point? So I really do feel like homeowners are in a really tough squeeze at the moment, unless you're in that sort of top upper echelon scale of homeowners.

BRAD SMITH: Well, yeah, just to put a bow on this, seven of the top 10 metros for 1 million plus homes, they were in California. And of course, we know that California is one of the wealthiest states in the US. And so this is a sector that-- an area that we're going to continue to monitor extremely closely, one of the biggest investments that many families will ever make as well, homeownership.

RACHELLE AKUFFO: And that's a fair point there.