How would rising interest rates affect housing prices? This is a question many ask, and you should as well. It's relatively simple to calculate the mortgage affordability as interest rates rise. Another dimension of the market is that of renting vs. buying and how rising interest rates would affect that decision. According to a recent article,
"Can the housing recovery survive rising interest rates?
That is, as interest rates rise, will we see average housing prices level off or even start to decline again? This question is becoming increasingly relevant. Mortgage applications have fallen in some weeks recently as rates have risen, and the average mortgage rate just ticked back toward 4 percent, for the first time since the end of last year. To keep this in perspective, rates are still at almost the lowest levels since records have been kept, per the chart below, and are still down significantly over the last year, despite the recent uptick."
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