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A recent "The Indicator from Planet Money" podcast episode "Rising Rates Vs. The Housing Market" explains how housing price declines don't necessarily follow fr

• steveax 8y ago
  Yeah, there’s less of a relationship between those than one would think. Slightly related: it’s time to phase out the mortgage interest deduction and plow that revenue into affordable housing.
• cbayram 8y ago
  Sure, I can see that. Without not knowing their argument, I can see the following pressures on sustaining current price levels: 1. Investor money swooping up property for rental purposes. 2. Home owners refraining from selling in a buyers’ market. As long as they are able to make payments on their leveraged debt. But there is no denying that higher interest rates put a downward pressure on home prices due to debt being more expensive and investment money finding more promising returns elsewhere; i.e. bonds. Some other downward pressures I could see impacting housing markets are: 1. Lack of wage increases 2.Baby boomers dumping homes on the market over the next decade 3. Insolvent municipal/state public pensions. Money on these IOUs gotta come from somewhere. Bonds and cuts are one way, raising taxes is another.