>Real estate prices are not solely a function of supply and demand. If the value of your money goes down, so too will the price of your house.
Sorry, but that statement is pure nonsense. If the value of your money goes down, you will need more if it to purchase any good (since it is less valuable). Therefore the price of your house has increased, since you need a nominally greater amount of money to purchase the house.
And, yes, all asset prices are ultimately determined by supply and demand. Suppose you are the last person on earth. You necessarily own all houses on earth. However, you cannot sell them for any price, so no price exists. Now suppose you own the only house on earth (with its current population). I imagine you might be unwilling to give up the comforts of a home at any price (although people will likely offer huge sums for the house). As you can see, the supply and demand of assets fundamentally determines their values.
The housing prices don't really adjust for foreign exchange rates of a currency most of the time. There are forces in both directions with foreign and local buyers both being impacted in different ways.
> The housing prices don't really adjust for foreign exchange rates of a currency most of the time.
That's really not a correct statement. The drivers of currency fluctuations are absolutely going to affect the value of housing (interest rates, legal infrastructure, etc.) As a prime example, consider the housing market in Vancouver. Prices have increased significantly, in large part due to capital flight from China. As holding RMB became less attractive, buyers altered their asset allocations.
> There are forces in both directions with foreign and local buyers both being impacted in different ways.
That's tautological. Holding one currency has the opportunity cost of not holding other currencies. If EURUSD increases, then holders of EUR will benefit exactly as much as holders of USD suffer (relative to one another).
I encourage you to look at an actual graph of housing prices and foreign exchange rates. They really don't track each other.
Short and long term there are different and very complex with multiple feedback loops. Also, most people have home loans and houses are not currency. Further, having your currency appreciate is bad for many parts of the economy.
Sure, long term there are impacts especially with foreign investors. But it's also vary local with Las Vegas housing market tracking different things than rural Minnesota. Even as interest rates have long term impacts.
> I encourage you to look at an actual graph of housing prices and foreign exchange rates. They really don't track each other.
I'd be very interested to see such a graph. I'd also be interested to know what you mean by foreign exchange rates (I've been assuming you're talking about USD relative to all other currencies). [0] seems to indicate that FX rates affect real estate prices.
> Also, most people have home loans and houses are not currency.
I really struggle to see how that's relevant in the slightest. No one claimed that houses are currency.
> Further, having your currency appreciate is bad for many parts of the economy.
That supports the notion that FX fluctuations will affect real estate prices. A region with worse economic prospects will likely have less demand for housing than an otherwise identical area with better economic prospects.
Sorry, but that statement is pure nonsense. If the value of your money goes down, you will need more if it to purchase any good (since it is less valuable). Therefore the price of your house has increased, since you need a nominally greater amount of money to purchase the house.
And, yes, all asset prices are ultimately determined by supply and demand. Suppose you are the last person on earth. You necessarily own all houses on earth. However, you cannot sell them for any price, so no price exists. Now suppose you own the only house on earth (with its current population). I imagine you might be unwilling to give up the comforts of a home at any price (although people will likely offer huge sums for the house). As you can see, the supply and demand of assets fundamentally determines their values.