When rates go up, the demand always comes down. One of the contributing factors to this, is due to the majority of US population being a W2 earner or on fixed income. Hence, many can no longer afford the property that they wanted, because the monthly Principle & Interest payment is that much higher after the interest rate increase. So if before the rate hikes they could afford a house worth $500,000 (-10% downpayment) knowing that a $450,000 mortgage is affordable, with a monthly payment of say $2,245/month at 3.5% rate. And now after the rate increases, the same mortgage amount equals to $2,998/m at a new 6% rate. And due to that $753 difference in their P&I payment, they can no longer afford that house. However, at the same time, most folks don't want to move to another area, nor do they wish to shop in a depressed or a less desirable location. And say, they love that particular school district, for their kids sake... Hence, they decide to wait until the rates come back down. And when that decision to wait occurs with 100M+ Americans - the demand goes down and so do the house prices. And this is a naturally occurrence driven by the Housing Market in order to compensate the potential remaining buyers. Because the lower the price - the lower the monthly mortgage payment. Moreover, this is a very basic and cyclical occurrence. In time, this will also created a good buying opportunity...
