Do Rising Interest Rates Make Home Prices Drop? Mortgage Rates vs Housing

Does the increase in mortgage interest rates cause home prices to drop? We looked at the last time interest rates went up by more than 2% and then what happened to interest rates. Every single times in the last 50 years that interest rates went up, home prices also went up. There is speculation that home prices will decline in 2022 or 2023, although nothing shows this is going to happen.

The misconception that home prices go down with a rise in interest rates is because home mortgage payment increase in value. But there are other factors that affect home prices. Inflation is a key indicator that interest rates are rising, and inflation makes real estate go up in value.

There are people that ask us if home prices are going to drop, and nobody can claim for certain that they will or not, but we currently don’t see any sign of home values falling in 2022 or in 2023.

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