[(former)FormerSanDiegan]

If rates changed instantaneously by 1% and no other factors in the economy changed, then the price would be inversely related to rate.

However, rate changes never happen in a vaccum. Rates respond to underlying economics, so changes in home prices rarely respond as you suggest.

Example #1: From 2006 to 2010, 30-yr mortgage rates declined from around 6.5% to less than 5%.
Did prices increase by 10%+ during that period ? Hell No. Prices declined at the steepest rates since the depression.

Example #2: In late 2002 30-yr mortgage interest rates were at 6%. BY mid 2006 they were 6.5%.
Were home prices flat during that period ? No. They were quite bubblicious.

Example #3: From 1990 to 1995 rates dropped from 10% + to about 7.5%. Did prices rise during this period ? Not really.
This period included the worst decline (until superceded by the 2006-2009 decline) in home prices in post-war California.

Example #4: In 1972, 30-yr mortgage rates were about 7.4%. By 1989, rates were above 10%. What did home prices do doing this period ?
Hint: they did not decline.

The simple point is that it’s not that simple. Rates do not change in a vacuum. As a thought experiment prices are inversely proportional to rates, but in reality, it is not neccessarily so.

[(former)FormerSanDiegan]

If rates changed instantaneously by 1% and no other factors in the economy changed, then the price would be inversely related to rate.

However, rate changes never happen in a vaccum. Rates respond to underlying economics, so changes in home prices rarely respond as you suggest.

Example #1: From 2006 to 2010, 30-yr mortgage rates declined from around 6.5% to less than 5%.
Did prices increase by 10%+ during that period ? Hell No. Prices declined at the steepest rates since the depression.

Example #2: In late 2002 30-yr mortgage interest rates were at 6%. BY mid 2006 they were 6.5%.
Were home prices flat during that period ? No. They were quite bubblicious.

Example #3: From 1990 to 1995 rates dropped from 10% + to about 7.5%. Did prices rise during this period ? Not really.
This period included the worst decline (until superceded by the 2006-2009 decline) in home prices in post-war California.

Example #4: In 1972, 30-yr mortgage rates were about 7.4%. By 1989, rates were above 10%. What did home prices do doing this period ?
Hint: they did not decline.

The simple point is that it’s not that simple. Rates do not change in a vacuum. As a thought experiment prices are inversely proportional to rates, but in reality, it is not neccessarily so.

[(former)FormerSanDiegan]

You cannot really ever have the following three words together:
“Texas”
“beach”
and
“culture.”

You can have any two of the three, but never all three.

[(former)FormerSanDiegan]

You cannot really ever have the following three words together:
“Texas”
“beach”
and
“culture.”

You can have any two of the three, but never all three.

[(former)FormerSanDiegan]

You cannot really ever have the following three words together:
“Texas”
“beach”
and
“culture.”

You can have any two of the three, but never all three.

[(former)FormerSanDiegan]

You cannot really ever have the following three words together:
“Texas”
“beach”
and
“culture.”

You can have any two of the three, but never all three.

[(former)FormerSanDiegan]

You cannot really ever have the following three words together:
“Texas”
“beach”
and
“culture.”

You can have any two of the three, but never all three.

[(former)FormerSanDiegan]

B

[(former)FormerSanDiegan]

B

[(former)FormerSanDiegan]

B

[(former)FormerSanDiegan]

B

[(former)FormerSanDiegan]

B

[(former)FormerSanDiegan]

[quote=yogamom]Agree that the goods we need like food and gasoline are going up quickly.[/quote]

Agree on the food thing, but gasoline is optional.

http://en.wikipedia.org/wiki/Bicycle

http://www.nissanusa.com/leaf-electric-car/index#/leaf-electric-car/index

http://www.thewalkingsite.com/

[(former)FormerSanDiegan]

[quote=yogamom]Agree that the goods we need like food and gasoline are going up quickly.[/quote]

Agree on the food thing, but gasoline is optional.

http://en.wikipedia.org/wiki/Bicycle

http://www.nissanusa.com/leaf-electric-car/index#/leaf-electric-car/index

http://www.thewalkingsite.com/

[(former)FormerSanDiegan]

[quote=yogamom]Agree that the goods we need like food and gasoline are going up quickly.[/quote]

Agree on the food thing, but gasoline is optional.

http://en.wikipedia.org/wiki/Bicycle

http://www.nissanusa.com/leaf-electric-car/index#/leaf-electric-car/index

http://www.thewalkingsite.com/

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