3 ms·

Anyone know what caused such a jump around 2001-2003?

• ldayley 7y ago
  Post dotcom bust and 9/11 interest rates were dropped significantly to spur consumer spending.
  • weaponizedwords 7y ago
    interesting, so interest rates go down and prices go up then?
    • ldayley 7y ago
      Lowering interest rates makes borrowing cheaper, and it has the effect of putting more money to work faster. It’s one of the basic tools of economic policymakers.
    • H8crilA 7y ago
      Yes, that's the most basic feature of interest rates/discount rates. In fact it's kind of the definition.
  • bequanna 7y ago
    Right. Without factoring in interest rates, this doesn’t really tell us much about how affordability has changed.
    • dmurray 7y ago
      The cost of the home is normally quoted in dollars today (what the seller receives), not the total dollars you will pay on your mortgage. So interest rates don't have much to do with affordability.
      • deleted 7y ago
        [deleted]
      • war1025 7y ago
        The dollars don't really matter though because the majority of people don't actually have that money. The majority of people base their housing budget on the monthly payment they can afford. When interest rates are low, people can afford higher principal values. When interest rates go up, the amount of a monthly budget that can go toward principal goes down. Housing prices will tend to fluctuate to match what people can afford, and what people can afford is determined by their monthly payment.
      • sokoloff 7y ago
        The typical early stage buyer is financing their home and very often buying within 25% of the mortgage they can qualify for, especially in competitive markets. Mortgage rates absolutely drive this affordability. When you’re bidding against other buyers, the more they can borrow for a constant monthly payment, the higher the equilibrium price will be.