[wbsss4412]

Interest rates are highly sensitive to markets that have fairly tight feedback loops.

Home prices are set by relatively few transactions taking place at any one time in a close geographic area. There’s going to be a good amount of lag between higher rates prices actually dropping, especially given that the trend was increasing prices. We’ll likely see a leveling off first, then a degree of fall.

It’s hard to speculate about how much the prices will fall, ultimately homeowners make up such a large proportion of the population that they have a lot of leverage as a voting block, and government is responsive to their desire to protect their investment. Given the degree of run up we saw during, and even prior to, COVID, I’d estimate that there is a lot of room for prices to come down, but a lot of that drop is going to be driven by policy, not “free” markets.