House values are driven by what people can afford, which is heavily influenced by the interest. If you can afford $1k/mo and 10% of that is interest, 90% is go

House values are driven by what people can afford, which is heavily influenced by the interest. If you can afford $1k/mo and 10% of that is interest, 90% is going to principal and you can figure out the math on what your total principal would be. If 20% of that is going to interest, you're still paying $1k, but now your initial principal is much lower, which at scale will drive housing down to some equilibrium where, to be a bit reductive, average people can afford average houses. My parents bought their house in 1979, for $33k. ~10 years later, when rates had lowered significantly, it was worth $150k.