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(former)FormerSanDiegan
Participant[quote=Huckleberry]I stand by my original post…
The consumer is de-leveraging and paying down debt, not taking on risky high priced debt, such as depreciating assets (houses).
The housing market is dependent on demand. Higher mortgage rates remove potential buyers (demand).
Diminishing demand means no pricing power = lower prices (basic economics).[/quote]
If those higher interest rates are accompanied by a recovering economy (including jobs) then there may be no net reduction in the number of buyer(demand). If the recovery stalls or reverses, rates are likely to dip again.
Participant[quote=briansd1]
Hard to look to recent history for guidance.I remember people claiming that real estate prices would never drop without an employment downturn.
But, surprise, surprise, we had a real estate crash that caused general unemployment, which then caused more more unemployment.
I think that rising rates will cause stagnation and more choices for buyers.[/quote]
It depends on what accompanies higher interest rates.
If rates are rising becuase of an improving economy, as in recovery stages of the business cycle, there could actually be more demand as interest rates rise. (See all historical recoveries for example)
If interest rates are rising because of increased inflation, then it takes more dollars to buy the same thing (rent, property) and prices also go up (see the 1970’s).
Interest rates do not go up in a vacuum. Most people that assume that interest rate increases translate into lower home prices ignore all the other variables.
Participant[quote=briansd1]
Hard to look to recent history for guidance.I remember people claiming that real estate prices would never drop without an employment downturn.
But, surprise, surprise, we had a real estate crash that caused general unemployment, which then caused more more unemployment.
I think that rising rates will cause stagnation and more choices for buyers.[/quote]
It depends on what accompanies higher interest rates.
If rates are rising becuase of an improving economy, as in recovery stages of the business cycle, there could actually be more demand as interest rates rise. (See all historical recoveries for example)
If interest rates are rising because of increased inflation, then it takes more dollars to buy the same thing (rent, property) and prices also go up (see the 1970’s).
Interest rates do not go up in a vacuum. Most people that assume that interest rate increases translate into lower home prices ignore all the other variables.
Participant[quote=briansd1]
Hard to look to recent history for guidance.I remember people claiming that real estate prices would never drop without an employment downturn.
But, surprise, surprise, we had a real estate crash that caused general unemployment, which then caused more more unemployment.
I think that rising rates will cause stagnation and more choices for buyers.[/quote]
It depends on what accompanies higher interest rates.
If rates are rising becuase of an improving economy, as in recovery stages of the business cycle, there could actually be more demand as interest rates rise. (See all historical recoveries for example)
If interest rates are rising because of increased inflation, then it takes more dollars to buy the same thing (rent, property) and prices also go up (see the 1970’s).
Interest rates do not go up in a vacuum. Most people that assume that interest rate increases translate into lower home prices ignore all the other variables.
Participant[quote=briansd1]
Hard to look to recent history for guidance.I remember people claiming that real estate prices would never drop without an employment downturn.
But, surprise, surprise, we had a real estate crash that caused general unemployment, which then caused more more unemployment.
I think that rising rates will cause stagnation and more choices for buyers.[/quote]
It depends on what accompanies higher interest rates.
If rates are rising becuase of an improving economy, as in recovery stages of the business cycle, there could actually be more demand as interest rates rise. (See all historical recoveries for example)
If interest rates are rising because of increased inflation, then it takes more dollars to buy the same thing (rent, property) and prices also go up (see the 1970’s).
Interest rates do not go up in a vacuum. Most people that assume that interest rate increases translate into lower home prices ignore all the other variables.
Participant[quote=briansd1]
Hard to look to recent history for guidance.I remember people claiming that real estate prices would never drop without an employment downturn.
But, surprise, surprise, we had a real estate crash that caused general unemployment, which then caused more more unemployment.
I think that rising rates will cause stagnation and more choices for buyers.[/quote]
It depends on what accompanies higher interest rates.
If rates are rising becuase of an improving economy, as in recovery stages of the business cycle, there could actually be more demand as interest rates rise. (See all historical recoveries for example)
If interest rates are rising because of increased inflation, then it takes more dollars to buy the same thing (rent, property) and prices also go up (see the 1970’s).
Interest rates do not go up in a vacuum. Most people that assume that interest rate increases translate into lower home prices ignore all the other variables.
Participantgo electric … Nissan Leaf
(no engine, just an electric motor, no oil changes)or sort of electric : Chevy Volt
Prius plug-in hybrid.Participantgo electric … Nissan Leaf
(no engine, just an electric motor, no oil changes)or sort of electric : Chevy Volt
Prius plug-in hybrid.Participantgo electric … Nissan Leaf
(no engine, just an electric motor, no oil changes)or sort of electric : Chevy Volt
Prius plug-in hybrid.Participantgo electric … Nissan Leaf
(no engine, just an electric motor, no oil changes)or sort of electric : Chevy Volt
Prius plug-in hybrid.Participantgo electric … Nissan Leaf
(no engine, just an electric motor, no oil changes)or sort of electric : Chevy Volt
Prius plug-in hybrid.Participant[quote=Huckleberry]
We all know that rising interest rates means lower home prices as it knocks more potential buyers (demand) out of the market.
[/quote]
I don’t think we all agree rising interest rates automatically mean lower home prices.
If rising interest rates occur during an economic recovery (which has happend many times in the past) the opposite has occurred. (look at prices from 1965 to 2000)
Conversely, declining rates do not always translate into higher prices (look at rates and prices from 2006 to 2009).
Participant[quote=Huckleberry]
We all know that rising interest rates means lower home prices as it knocks more potential buyers (demand) out of the market.
[/quote]
I don’t think we all agree rising interest rates automatically mean lower home prices.
If rising interest rates occur during an economic recovery (which has happend many times in the past) the opposite has occurred. (look at prices from 1965 to 2000)
Conversely, declining rates do not always translate into higher prices (look at rates and prices from 2006 to 2009).
Participant[quote=Huckleberry]
We all know that rising interest rates means lower home prices as it knocks more potential buyers (demand) out of the market.
[/quote]
I don’t think we all agree rising interest rates automatically mean lower home prices.
If rising interest rates occur during an economic recovery (which has happend many times in the past) the opposite has occurred. (look at prices from 1965 to 2000)
Conversely, declining rates do not always translate into higher prices (look at rates and prices from 2006 to 2009).
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