Patsy Waldron Hi Patsy, first off i think your mistaken about home prices not jumping. Currently the home prices across the nation are at, close too or above recession prices.
Secondly when the interest rate goes up it will cost people more money monthly to buy the same home.
Right now with great credit and a good down payment you get 3.2% APR for a 30 year loan, when that needle moves to 4% (let's not even mention 5% or 6%) it will cost potential home buyers more money to make their monthly payment at which point they will be forced to settle for a smaller home (less expensive) or continue to rent, thus flooding the rental market with renters because they can't afford a home anymore and the home they can afford is to small.
So i personally think history repeats its self, and as history has proven time and time again when interest rates go up, house prices will come down. (again i'm not saying to they will crash, but they will come down until they see some traction and that is where they will stabilize)