They Say Rates Are Being Cut: What Happens to Home Prices?
Whenever rate cuts come up in the news, everyone says home prices will rise, but I'm not so sure.
Lower mortgage rates are clearly a positive, but home prices have already risen so much that I wonder if genuine buyers are being priced out even more. Normally, prices rise only after transaction volume picks up.
Seeing how divided the experts are, I guess nobody really knows in the end.
3 answers
The “rate cuts = rising home prices” formula is outdated. These days, with loan regulations and DSR, even if interest rates go down, borrowing limits get in the way—so actual homebuyers are actually less able to buy. Yeah, that’s right.
Well, ending it with “nobody knows” feels a bit lazy. It’s not that experts disagree—they’re each speaking in line with their own positions—and at the very least, you should look up interest rate direction and volume indicators yourself and make a judgment. It feels like you wrote this on a hunch, which is disappointing.
I see it similarly to the author. Even if interest rates come down a little, what good is that when house prices have already risen? And if transaction volume doesn't pick up, it just repeats the pattern of raising asking prices and then slumping again. Gangnam may be different, but in the provinces, population itself is a variable, so it can't be explained by interest rates alone.