What’s more likely? Interest rates up 1% or home prices down 10%?

Your Monthly Payment is Key

“A 1 percent increase in interest rates – from 5 percent to 6 percent – requires a 10 percent decline in home prices to have the same monthly payment.”

It’s a tough question! I would say a 1 percent increase in interest rates is more likely than an additional 10 percent decline in home prices in many parts of metro Phoenix, especially in the first-time home buyer price range.

Home prices in other areas of metro Phoenix will probably fall 10 percent or more before they bottom out. Interest rates are the wild card. I just realized I have a much better feel for home prices, as shaky as it is, than I do for interest rates.

July 27, 2009 by Realtor John Wake

About The Author

John Wake

Born in Phoenix, trained as an economist and now a licensed Realtor, John uses hard data from the real estate market to help his clients -- buyers and sellers of residential real estate -- uncover their best choices for finding the right home or finding a buyer for their current home.

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