Skip To Content

Will an Increase in Interest Rates Crush Home Prices?

Many potential Olympia home buyers  might be wondering with interest rates predicted to rise in 2015 how will the affect home prices? By looking at the past housing cycles the outlook is very positive for the housing market!!

December 5 2014

Will an Increase in Interest Rates Crush Home Prices? | Simplifying The Market

There are some who are calling for a substantial drop in home prices should mortgage interest rates begin to rise rapidly. Intuitively that makes sense. The cost of a home is determined by the price of the home and the price of financing that home. If mortgage interest rates increase, less people will be able to buy. The logic says prices will fall if demand decreases.

However, history shows us that this has not been the case the last four times mortgage interest rates dramatically increased.

Here is a graph showing what actually did happen:

Interest Rate Increases | Simplifying The Market

We will have to wait and see what happens as we move forward. But, a fall in prices should rates go up is not guaranteed.

Trackback from your site.

Leave a Reply