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A comment on The Era of Very Low Inflation and Interest Rates May Be Near an End. Parent comment

Re:The Era of Very Low Inflation and Interest Rates May Be N... by jpetso on Thursday April 26, 2018 @05:04PM (#16935770)
When interest rates rise, prices fall. New buyers have a certain amount of money they're willing to pay each month and the market adjusts to that, so it makes little difference there. Existing owners would be the ones getting hit by rising interest rates, just as they were bagging outsized profits when rates were falling.
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Re:The Era of Very Low Inflation and Interest Rates May Be N... by BenoitEssiambre on Thursday April 26, 2018 @05:29PM (#16936004)
Existing owners wouldn't really be affected if they plan to live in their house as it's just paper wealth that they can't access until they sell anyways.

Those that downsize just after interest rates rise in order to spend the value locked in their house might lose a bit depending on whether any of the money is reinvested in something else after they sell.

People who will lose the most are house builders. Their revenue is directly tied to house prices. However, for a rate rise to be sustainable there has to be other good ways to make money out there otherwise rates will likely quickly go down again.

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Re:The Era of Very Low Inflation and Interest Rates May Be N... by toasterlovin on Thursday April 26, 2018 @05:12PM (#16935843)
Yeah, I guess I meant that house prices would crater. Obviously some people benefit from that and some don't.

My intuition is that it would also precipitate an economic downturn. Many households will see a drastic deterioration of their balance sheets, which should act as a damper on consumer spending. Which would, in theory, have 2nd order effects on the real estate market...

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Re:The Era of Very Low Inflation and Interest Rates May Be N... by kurthr on Thursday April 26, 2018 @07:15PM (#16936852)
People won't be able to borrow against their lost wealth either (or only at very high rates). Builders/Flippers will stop spending and so the construction trades will suffer a lot... ditto RE sales people and their 6% commissions. I don't think inflation would be high for long.
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