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> Home prices - these will fall when interest rates fall This is the opposite of what will happen. Homebuyers express their housing budget in the amount they c
by runako 3y ago
> Home prices - these will fall when interest rates fall
This is the opposite of what will happen. Homebuyers express their housing budget in the amount they can spend each month. That then translates to a home price. If rates come down, that budget translates to a higher home price. (All things equal, if a buyer has already decided to spend $X, they are not going to spend 0.8 * $X to get a lesser place just because rates have come down.)
When rates come down, houses are going to get still more expensive.
- nindalf 3y agoIn the short term that's absolutely correct. In the medium term higher home prices and lower interest rates encourage more building. Assuming that NIMBYs don't prevent that construction (big if), that would lead to lower home prices. But high interest rates isn't making things affordable because first time buyers can't afford a mortgage at those rates.