Real Estate Leads, search new homebuyers in your area
Search – Select – Connect
Real Estate Leads - 800-230-9019

Qazzoo Reviews the Connection between Interest Rates and Housing Bubbles

Interest rates are a major driver in the housing market. When interest rates go up the value of homes come down and the opposite is also true. In many cases it is the cost of money that enables people to move up or keeps them from moving up. In other cases it is the value of their current home.

interest rateWhen interest rates are lowered the purchase power of the buyer increases which creates higher buying opportunities. When the volume of sales go up so do the prices of homes as the laws of supply and demand are triggered. This is why it is hard to get a great deal on the next home while getting an equally great deal on the home we are selling, as a rising tide lifts all boats. This is where interest rates again kick in. When the rates climb the value of homes goes down as the demand decreasing when the buying power of the average person is reduced.

When interest rates climb quickly and the climb is dramatic the real estate market cannot always absorb the inventory and the market is likely to slow or in the worst case scenario it could implode as home buyers cannot afford to get in and sellers cannot normally sell for less than their existing mortgage.

Interest rates have been historically low for so long now that the government and banks are concerned that each time they tick up mortgage rates by a quarter point that the market will go from slow to a full stop. Many home owners today have never experienced rates over 6% and the shock of a reasonable rate could cause a dramatic decrease in value and plunge the entire market into another bursting bubble scenario.

Michael Urbanski Michael Urbanski (1356 Posts)

Michael Urbanski is a successful entrepreneur with extensive experience online as the CEO/founder of Heavy Hammer since its inception in 1998. Heavy Hammer has several profitable online platforms for local advertising. Michael also owns several patents for geographic advertising online and has numerous other patents in process. Before launching Heavy Hammer in 1999 Michael was the top salesman for foreclosure homes in the state of Maryland. Among his accomplishments Mr. Urbanski has been a decorated Air Traffic Controller in the Air Force, a successful restaurateur and has written and produced several award winning feature films and top tier video games. Leveraging the success of his previous ventures and experiences, Michael self‑financed and launched Heavy Hammer which has been profitable every year of the 12 years it has been in operation.

  1. I am genuinely thankful to the holder of this web page
    who has shared this fantastic piece of writing at here.

  2. It’s part of the job, but it’s not easy either.

  3. Keeping up with the ebb and flow of the housing market can be a bear. It’s always good to know someone who keeps up with the trends involving interest rates and market values.

Leave a Reply