[quote=sdrealtor]Also at some point prices will start going up again while rates are rising too. Rates will rise because the economy is booming again. When the economy booms people have more money and feel more confident. They buy more houses and prices rise. This laboratory thinking of CARs is flawed in so many ways. It’s far too simplistic[/quote]
The interest rates in Spain, Greece, etc. were rising because their economies were booming?
……………
The reason prices were rising in the face of rising interest rates during the 1970s and 1980s was because it coincided with the huge influx of women in the workforce. This provided every household with a (sometimes significant) increase in purchasing power. As with low interest rates and other incentives, credits, or subsidies, when large groups gain purchasing power, it is sellers who benefit from it in the form of higher prices; buyers end up either maintaining or losing purchasing power on a relative basis.
Additionally, during the 70s and 80s, unions were stronger than they are today and people were able to demand raises at the time. Those days are over now.
I see no impetus for higher housing prices in the face of higher interest rates unless our politicians decide to crawl out of the pockets of their corporate/capitalist contributors and change our tax and trade policies so that jobs can come back from overseas.
