Interest rates(mortgage rates) are one of many factors that help determine housing values. Right now.. supply and demand are much more powerful factors in determining home prices. Another factor is credit availability, and loan standards.
Prices got absurdly high due to a lack of lending standards, massive availability of credit, and low interest rates. … you can bring the rates down to wherever you want… but lending standards are back, and credit is much harder to come by.
If the fed does lower the finds rate by another 2% over the next 2 years, we will probably have had much bigger problems than just housing to prompt such a drastic reduction.(I agree this is possible and even likely).. but there would most likely be a recession and more unemployment in this scenario(again likely)… the effects of this on housing will do more harm than good done by any rate cut… not to mention the massive inflation that would be caused by such rate cuts.
To answer your question KEV .. NO, if the fed lowers interest rates by another 2% on the next 2 years, there will be much worse problems in USA than a housing bubble popping. The fed wouldn’t lower rates that much unless we are REALLY hurting. If we are hurting, how are we gonna buy homes anyways?
