[quote=SK in CV][quote=FormerSanDiegan][quote=anxvariety]
I am not in/on a lease, the question isn’t particular to Coastal CA – opinion is that both are mostly irrelevant. How can one argue that change in interest rates will not affect prices?[/quote]
If you look at the past 40+ years of data …increases in interest rates do not correlate with decreases in property values.[/quote]
Gotta be careful with the difference between correlation and causation. You’re right that higher interest rates haven’t correlated with lower property values. (As a practical matter, we haven’t seen interest rates do anything but go down for the last 30 years, save for some minor fluctuations.) Particularly in the last 30 years the Fed has been manipulating interest rates to counter inflation. So higher interest rates were used to stop prices from going up, or at least to stop them from going up as fast. So when price acceleration slows, interest rates drop.
Interest rates DO affect prices. The stronger correlation than interest rates v prices, is that between changes in interest rates and the rate of change in prices.[/quote]
Agreed, if there is a correlation between A and B, it may not necessarily true that B causes A or that A causes B.
However, if there is no correlation, there is no causation.
Rates have declined in the past 30 years, so let’s look before 1982.
Look at the period from the 1960’s to the early 1980’s…
Interest rates went from the 4-5 % range to the teens. Where did house prices go in that 20 year period ?
Interest rates increased dramatically in the period form the late 1960’s to 1982. Did the rate of change of home prices increase or decrease ?
