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Health & Fitness

Rates Up, Prices Down, Right? Not Always...

When home mortgage interest rates go up, prices come down, right? Not always.

There is certainly a connection between interest rates and housing prices. Higher rates mean higher payments and lower purchasing power for buyers. But the relationship between rates and prices is not a simple one. In addition to interest rates, there are many other market forces that affect housing prices: available inventory, the quality of that inventory in your particular local market, income growth, rates of household formation, the rental housing market, gas prices, immigration, household formation rates, and a host of other economic factors.

There are a number of voices in the real estate market today that are saying that since rates are going up, prices must be coming down. As if it were only that simple. When rates go up, prices do not automatically come down. Take a quick look at the data and see for yourself. The following chart shows how housing prices usually continue to rise even when interest rates spike upward. As they say, the data doesn’t lie.

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To truly understand a real estate market, expert data analysis is required. I can help you do that. I consider my real estate work to be more about market analysis and education than salesmanship. Visit my other site to register for market updates. Let’s do some housing for good.



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