RDC Appraisals Talks About How Interest Rates Drive Property Value

MONTVALE, N.J. - Dec. 5, 2022 - PRLog -- Since the pandemic outbreak, economies have been severely impacted, causing interest rates to rise and fall. This changes in interest rates have had a knock-on effect on other sectors of the economy, including real estate. RDC Appraisals examines the effect on the home prices when interest rates rise and the changes in real estate valuation.

What happens when interest rates go up?

When the economy is booming, interest rates tend to rise as the economy strengthens. Mortgage interest rates in the United States are rising faster than they have in a long time, causing a shift in home prices.

Mortgage rates will rise in response to rising interest rates. Usually, rising mortgage interest rates would result in a drop in home prices. This is because rising mortgage interest rates result in higher mortgage payments, which deter many buyers. This means that demand for houses will slow, and sellers will be unable to sell their homes as quickly, forcing them to lower their home prices. In essence, rising interest rates can cause a sharp decline in house prices as demand slows down from buyers.

According to  RDC Appraisals, a reputed real estate valuation firm, the recent rate increase had had a significant impact on purchasing power. "With the current average rate for the benchmark 30-year fixed mortgage around  7%, American homebuyers have nearly 246 percent less spending power than they did a year ago. People might not be keen to buy more expensive homes as rates rise, killing demand and driving down prices."

However, history has repeatedly demonstrated that higher mortgage interest rates do not cause home price declines. The historical evidence concludes that, in the absence of a major recession, home prices in the United States are likely to decelerate sharply but not fall.

"The future isn't certain with the continuous economic changes," a spokesperson for RDC Appraisals added, "but knowing how interest rates impact home prices is valuable for those looking to get into the real estate investment or simply buy their first home."

About RDC Appraisals, LLC

RDC Appraisals, LLC is a full service provider of Appraisals, Valuations, Consulting and Expert Testimonies for the real estate, mortgage lending, machinery and equipment, capital asset, divorce and estate settlement markets. An established leader in the appraisal and valuation industry, we have been faithfully meeting customers' needs with the highest integrity since 1990. See here: https://www.rdcappraisals.com/