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The rate was 12% but you completely ignore the average home price and its relation to average income. Housing was tremendously less expensive (even after intere
by whamlastxmas 8y ago
The rate was 12% but you completely ignore the average home price and its relation to average income. Housing was tremendously less expensive (even after interest), largely in part to the higher rate.
- hndamien 8y agoHigh rates result in lower prices. Low rates result in higher prices. The rate on its own is really pretty irrelevant.
- astura 8y agoExactly. Most home buyers take out a mortgage. Most people also look at monthly payments as a proxy for affordability. Monthly payments raise when interest rates rise. Therefore, sellers need to ask for lower prices when rates are high in order to attract buyers. A $150,000 mortgage at 12% interest has monthly payments of $1,543, at 5% interest its $805.