[omarhaneef]

I don't believe it is the case that interest rates and house values are strongly correlated. In theory they should be (inversely) correlated, but in practice, they have not been. Even the article you link to says:

"As you can see there are some points where it appears interest rates may have correlated with a price drop, like in the late 2000s. Those of us who were in real estate at the time know there were many other issues as well. Lending was horrible, there was record new building and tons of foreclosures, basically the opposite of what is happening now. I think most people in the industry would say increasing interest rates were not the main factor that caused the crash.

I think the more telling sign is from the 1980s and 1970s where interest rates rose to astronomical highs! The prime rates were more than 20% at one time. It is important to know that the first graph is not what mortgage rates were. Mortgage rates that people get on their houses are not directly tied to the prime rate. The chart below shows what mortgage rates were."