Wednesday, August 28, 2013

Why house prices are up (for now)

Mortgage rates have just started going up, and everyone knows when mortgage rates go up, house prices go down because people can't afford to buy as much house; however, when mortgage rates start to go up, house prices "head fake" up as people rush to buy a house to "lock-in" their mortgage interest rate before it goes even higher.


Anonymous said...

I don't see any historical correlation of interest rates and housing price "headfakes" in that graph. There must be something else that drove consistent housing price appreciation since 1976 (till 2008) regardless of what interest rates where doing. I think creative financial instruments and the Community Reinvestment Act play a larger role...that and a depreciating dollar. I still like property (in the right place) as an investment even now. Am I f'd up? Think about it...the US is still a less f'd up place to live than many other parts of the world.


Gerard said...

I think the corelogic data is too smoothed out, but look at the tail end where the interest rates spike up and the house prices spike up as well.