Home values have historically been significantly impacted by mortgage interest rates. Lets look at significant years and decades to highlight this connection:
1. 1970s: Mortgage interest rates significantly rose during this decade. The typical interest rate for a 30-year fixed mortgage was around 7.5% in 1970, but by 1980 it had increased to almost 13%. Because higher interest rates meant larger monthly payments for borrowers, making it harder for them to finance homes, this increase in rates resulted in a decline in home values.
2. 1980s: Mortgage interest rates hit a record high during this time period. The typical 30-year fixed mortgage rate in 1981 was above 18%. Due to the high rate, there was less of a demand for homes, which resulted…