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I'm afraid this discussion is in danger of sinking from finance into economics. Sure, what you describe is one thing that happens. Interest rates affect demand.
by nyeah 1y ago
I'm afraid this discussion is in danger of sinking from finance into economics. Sure, what you describe is one thing that happens. Interest rates affect demand. Demand affects price. If you pick your data, you can find times when that mechanism appears to dominate and the model fits perfectly for a while. But in general it's simply not the case that interest rates, alone, determine house prices.
- VWWHFSfQ 1y agoI think the point was that dropping interest rates alone will not make anything more affordable. It will actually have the opposite effect: increase prices without any material change to the underlying property value. Fueled purely by the demand of newly-qualified buyers.
- nyeah 1y agoYeah, that is the point. But it isn't necessarily correct. It's an idea. Sometimes it's true.