Effect of Rates on Prices

Written by Jim the Realtor

May 20, 2015

We saw yesterday that the number of sales in the first four months of 2015 was only exceeded by those in 2013 – which was the only other time mortgage rates were in the mid-3s.

Let’s compare the mortgage-rate history of those two years:

2013 vs 2015

In 2015, the spring kick got a early boost as rates dropped close to the enticing 3.5% range.  But now rates are on the upswing.

This graph from the latimes.com shows how prices jumped substantially in the first half of 2013, but stalled as soon as rates began rising:

price trend so cal

The lower rates haven’t boosted prices as much this year – of course, we started at a higher point. Rising rates now should cause at least the same effect that they did in the second half of 2013 – flatsville.

rates apr19

http://www.mortgagenewsdaily.com/05192015_freddie_mac_outlook.asp

1 Comment

  1. shadash

    I have family that lives in Denver. 3 years ago you could buy a house for 350k now that same property sells for 450k and is “going up”. Currently houses stay on the market for 4-5 days and are sold.

    Denver is an exact reflection of Southern California 4 years ago.

    I tried to explain that this is the same thing we went through a couple of years ago. They thought I was being condescending. Give their market 2 years and they’ll be at the same plateau we are with price. Assuming rates don’t fall again.

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