Will Increasing Mortgage Rates Impact Home Prices?

    Will Increasing Mortgage Rates Impact Home Prices? | Keeping Current Matters

    There are some who are calling for a decrease in home prices should mortgage interest rates begin to rise rapidly. Intuitively, this makes sense as the cost of a home is determined by the price of the home, plus the cost of financing that home. If mortgage interest rates increase, fewer people will be able to buy, and logic says prices will fall if demand decreases.

    However, history shows us that this has not been the case the last four times mortgage interest rates dramatically increased.

    Here is a graph showing what actually happened:

    Will Increasing Mortgage Rates Impact Home Prices? | Keeping Current Matters

    Last week, in an article titled “Higher Rates Don’t Mean Lower House Prices After All,the Wall Street Journal revealed that a recent study by John Burns Real Estate Consulting Inc. found that:

    “[P]rices weren’t especially sensitive to rising rates, particularly in the presence of other positive economic factors, such as strong job growth, rising wages and improving consumer confidence.”

    Last week’s jobs report was strong and the Conference Board just reported that the Consumer Confidence Index was back to pre-recession levels.

    Bottom Line

    We will have to wait and see what happens as we move forward, but a decrease in home prices should rates go up is anything but guaranteed.

    Source:  Keeping Current Matters

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    Steve Baker

    Steve comes to the world of real estate with nearly 30 years of Marketing and Graphic Design experience. These two very important skills make him ideal for this profession. In 2017 he achieved his highest accolade to date becoming a global, award-winning real estate graphic design/marketing recipient. Mr. Baker is not only a REALTOR but the Director of Marketing for Rinehart Realty. His education and work experience also include a Bachelor degree in Education and degrees in Radiologic Technology and Medical Ultrasonography. He was a pioneer in the field of Radiology PACS development and Radiology Voice Recognition adoption and implementation in southwest Virginia. His previous positions as Director of Radiology and PACS Administrator lead to enormous development in resources and project management necessary to succeed in the field of real estate. Steve is a writer and developer for a variety of blogs and real estate publications. He recently completed his first book of quotations and is currently working on a Real Estate Marketing book. He is a strong supporter of the United Way, having won a past Campaign Coordinator of the Year award. He is also a strong advocate for breast cancer research and education. Mr. Baker has a history of work experience developed on the foundation of a strong work ethic, the pursuit of excellence, quality, honesty and integrity.

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