I’m a layman, not an expert by any means but wouldn’t interest rate increasing mean spending, including buying property, decrease? Would that not mean that house prices would fall to intice more spending?
I understand currently interest rates are normal zing or falling but hasn’t this been the case for many years now since COVID lockdown?
In: Economics
New homes are being built at a slower rate and the new homes that are being built, are being built for way above “normal” expected costs. For example, there is a new development going up near me. When they started pre-pandemic, the signs said coming soon starting in the low 400s ($400,000). Now it says starting in the low 500s. That is just inflationary pressure in labor and building materials.
Add to the market the fact that my house is now worth $100,000 more than when I bought it, but if I sold today I would have to downgrade my situation in order to make out from the sale. Why would I consider moving?
So there is also a shortage of already built homes going up for sale, which only further drives up the market price. Interest rates might have an effect on how many people are willing to buy, but it is not enough to offset the massive difference seen in supply and demand.
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