Secret #9 – The Fast and Slow Economic Fundamentals of House Prices
Changes in Demand – Fast and Variable
Interest Rates. Interest rates have a huge impact on the demand for houses and interest rates can change very fast relative to population and income.
Lending Standards. Mortgage credit standards can change demand fast or slow, and a little or a lot, depending on the change in mortgage credit standards.
Investors. Investors can jump into and out of the single-family house market relatively fast and for many different reasons.
Changes in Demand – Slow and Steady
Income. As area incomes increase, more buyers are willing and able to spend more on buying houses.
Population. As population increases, the additional households bring additional money to chase the houses in the area.