Interest rates and their affect on real estate prices.

[Ryan V.]

While interest rates should be relatively low for a year at least, they will rise one day. How do you think that will affect real estate prices? In theory, as rates rise prices should be adjusted to offset the added expense of borrowing, but there are so many other variables that could counter that relationship.

Knowing the relationship will help determine better investment strategies. Also, it's fun trying to figure it all out!

What do you think?

[Mitch Kronowit]

The old conventional, but flawed, wisdom is that real estate values move opposite interest rates. For example, earlier last decade, interest rates were low and prices went through the roof. However, today, even lower rates have failed to pull real estate values out of the gutter.

Interest rates have some effect or influence, but there are a number of other factors (unemployment, economic outlook, population growth, household creation/consolidation, consumer confidence, tax codes, etc.) that are more powerful in determining housing prices.