Artificial low interest rates are creating a bubble of a different kind.
Within reason, many people don’t care about how much they pay for a house, they only care about their monthly payment. Thus they are bidding up properties which benefits previous buyers.
A $400,000 loan has an $1800 monthly payment today.
Depending on taxes&insurance, total monthly housing expense is $2500+/- ($30k annual) which is affordable for many, perhaps cheaper than renting.
If interest rates were 6% payment would be $600 a month higher and would be harder for borrowers to qualify.
If interest rates were higher, would prices come down?
