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Reply to "Will DC housing prices rise if/when Fed cuts rates in September?"
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[quote=Anonymous][quote=Anonymous]Yes. Housing prices will go up when rates are cut. This has been historically true. [/quote] Source? It's likely true that prices go up when mortgages rates decrease (more purchasing power for buyers). But it's a big leap from fed interest rate cuts (of short term rates) to lower mortgage rates. "Historically", the yield curve typically slopes upwards (long-term rates are higher than short term rates). So if the short-term rate is cut by the fed 3-4 times, to 4.25%, "historically" longer term rates (the 10 year) would be marginally higher. The 10 year is currently at 4.25%. What is your argument for how short-term rate cuts lead to lower long term rates? If you don't have one, then don't argue that mortgage rates, which are keyed off of the 10 year, are going down.[/quote]
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