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re: How inversely related are housing prices and interest rates?
Posted on 1/7/13 at 6:49 pm to LSUtoOmaha
Posted on 1/7/13 at 6:49 pm to LSUtoOmaha
quote:
I'm wondering, however if this is a fallacy. It would seem to me like the price of homes/other private real estate itself would increase as rates plunged to all-time lows, thus neutralizing the effect. Anyone have evidence either way?
This is what would happen if the market were the same as it was in 2006 but its not. Credit requirements are much tighter now. There is pretty much no such thing as a subprime mortgage anymore and you actually have to being cash to close.
So what you're seeing is a lack of demand, not because people don't find the rates to be attractive, but because so many people can't get funding.
Posted on 1/7/13 at 7:01 pm to ZereauxSum
That makes sense. So there was basically an external factor (consumer's access to entering the market) which shifted the demand curve over the past five years.
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