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Will Increasing Mortgage Rates Impact Home Prices in the Hudson Valley?

Thursday, December 8, 2016   /   by Vanessa Saunders

Will Increasing Mortgage Rates Impact Home Prices in the Hudson Valley?

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There are some who are calling for a decrease in home prices should increasing mortgage rates continue to rise rapidly. Intuitively, this makes sense as the cost of a home is determined by the price of the home, plus the cost of financing that home. If mortgage interest rates increase, fewer people will be able to buy, and logic says prices will fall if demand decreases. (For a better understanding of how a rate raise of as little as one percent on a mortgage loan can affect borrowers, watch this excellent video provided by our preferred lenders at Luxury Mortgage Co.)

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 happened:

Will Increasing Mortgage Rates Impact Home Prices? | Keeping Current Matters

Last week, in an article titled “Higher Rates Don’t Mean Lower House Prices After All,the Wall Street Journal revealed that a recent study by John Burns Real Estate Consulting Inc. found that:

“[P]rices weren’t especially sensitive to rising rates, particularly in the presence of other positive economic factors, such as strong job growth, rising wages and improving consumer confidence.”

Last week’s jobs report was strong and the Conference Board just reported that the Consumer Confidence Index was back to pre-recession levels.

GPS Says:

We will have to wait and see what happens as we move forward, but a decrease in home prices should rates go up is anything but guaranteed.

Global Property Systems
Vanessa Saunders MBA MIMC CIPS - NYS RE Principal Broker
56 Lafayette Avenue Suite 320
White Plains, NY 10603
914-290-5258

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The data relating to real estate for sale or lease on this web site comes in part from MHMLS. Real estate listings held by brokerage firms other than Vanessa Saunders - Global Property Systems are marked with the MHMLS logo or an abbreviated logo and detailed information about them includes the name of the listing broker. The information appearing herein has not been verified by the Mid-Hudson Multiple Listing Service, Inc. or by any individual(s) who may be affiliated with said entity, all of whom hereby collectively and severally disclaim any and all responsibility for the accuracy of the information appearing at this web site, at any time or from time to time. All such information should be independently verified by the recipient of such data. This data is not warranted for any purpose. ©2019 Mid-Hudson Multiple Listing Service, Inc. All rights reserved.
The data relating to real estate on this website comes, in part, through the IDX of the Multiple Listing Service of Ulster County, Inc. Real estate listings held by brokerage firms other than Vanessa Saunders - Global Property Systems are marked with the IDX logo and detailed information about them includes the name of the listing broker.