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Another 2-3% Drop in Housing Prices Coming

The Fed’s have again increased interest rates by another quarter point today, bringing interest rates to their highest in more than four years. What does this mean for the upcoming real estate bust? Based on my previous article about the effects of interest rates on real estate prices, for monthly mortgage payments to stay the same housing prices will need to drop by another 2-3%. So for example, that $300k property is now going to sell for $291k – $294k. Not that a huge difference, but it can quickly add up! At the level interest rates are today, each full percentage increase means about a 10% drop in housing prices to keep the same monthly payments!

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