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I think that is correct. While most people buy a house -- they budget to a payment. The last time we moved our realtor even tried to engage us in this directi
by tcskeptic 8y ago
I think that is correct. While most people buy a house -- they budget to a payment. The last time we moved our realtor even tried to engage us in this direction. It is very similar to the way car dealers explicitly work -- "What do you want to spend a month?"
If interest rates rise dramatically, average home price will necessarily fall.
- francisofascii 8y agoThis recent Indicator podcast discussed this. Surprisingly, historical data does not support the notion that rising interest rates leads to lower housing prices. But maybe this time will be different. https://www.npr.org/sections/money/2018/05/15/611386612/rising-rates-vs-the-housing-market https://www.npr.org/sections/money/2018/05/15/611386612/risi... Here is the relevant paper by Laurie Goodman. https://www.urban.org/sites/default/files/publication/92541/the-impact-of-higher-interest-rates-on-the-mortgage-market.pdf https://www.urban.org/sites/default/files/publication/92541/...
- curtis 8y agoIf interest rates rise and then fall again over a relatively short term (several years or longer in the case of real estate) then housing prices might not fall much because owners will pull property off the market and wait for it to improve. The reduced supply (possibly greatly reduced) will tend to drive prices higher even as interest rates are driving them lower.