Historical Real Estate Values vs. Mortgage Rate Increases

Now, you have probably been hearing a lot of people say that with interest rates increasing so fast that the market is going to fall apart and that prices are going to drop.  I want you to know that historically, this is not true.

Over the last 30 years, interest rates have had 4 dramatic spikes; ranging from changes in interest rates of 1.6% to 2.37% and happening over the course of 8 to 14 months.

Each time interest rates spike, housing prices increased as well.  Now, this isn’t to say that it isn’t possible for the prices to go down, but there is no historical evidence that this is going to happen either.  There is a large variation in changes in housing prices, from 1.2% to 10.9%.  This is because its not just interest rates that determine price; which can be attributed to many factors, such as the supply, the inventory, and where the economy and unemployment are in a given area.