What’s Going To Happen with Home Prices This Year?
You may be thinking of selling because you’ve heard your home’s value has increased. But will that trend continue? Or will prices fall since mortgage rates have risen? History Shows Home Prices Don’t Fall When Mortgage Rates Rise While some people may worry the rise in mortgage rates this year will impact demand so much that home prices will depreciate, experts say otherwise. Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae , notes: “What I will caution against is making the inference that interest rates have a direct impact on house prices. That is not true.” To give you historical context, here’s a look at the impact on home prices over the past 30 years when mortgage rates rose by a percentage point or more. As the chart below shows, rates jumped by at least 1% six times in that time frame. In each case, home values increased. So, if you’re planning to sell, history shows rising mortgage rates have not had a negative impact on home prices.
The Impact of Rising Mortgage Rates on Home Prices
Start Date Oct 1993 Jan 1996 Oct 1998 June 2003 June 2005 Nov 2012
End Date Dec 1994 Sept 1996 May 2000 June 2004 July 2006 Dec 2013
Months Increase Home Prices
+3% +2%
14
2.38% 1.20% 1.81% 1.06% 1.18% 1.11% 1.46%
8
+13% +13%
19 12 13 13 13
+7%
+11%
+8% Source: Freddie Mac
Average
10
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