Just because rate goes up does not mean price have to come down. Just look at what happen to the 70s/80s when rate increases and stayed high for a long time. Specifically early 70s to early 80s, price went up like crazy. Rate doesn’t increase in a vacuum. If rate goes to 7%+, most likely, we’ll also have robust employment and wage growth. I don’t know what will happen here on out, but my guess is, the probability of us seeing another bubble pop like 2005 is as likely as we seeing big inflation happen like the 70s. Those are the two extremes. I predict we’ll probably see flatten prices for awhile and wage and inflation increase and we’ll be back to historical average valuation again.
