dragontamer , 1 year ago

But all of those things contribute to inflation of home values.

#1 is bullshit, because prices change near instantly upon expectations. Any information that’s publicly known immediately comes up to debate / discussion. That is, if any “agreement” has been made on higher prices, its already factored into the price.

#2: Higher Mortgages have always caused home values to fall in the past. In practice, the US consumer is monthly $$ bound: they buy what they can afford. US Buyers don’t think “$500,000 house”. Everyone converts that into $2700/month (current 7.3% rates), or $1700/month (3% rates).

A $1700/month house at 7.3% is a $250,000 house, literally half the cost of a $500k house at 3%. That means everyone who “can afford a $1700 house” has now been priced into $250k in today’s market, instead of $500k homes like 3 or 4 years ago.