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A comment on Home Price-to-Income Ratios. Parent comment
The majority of people base their housing budget on the monthly payment they can afford.
When interest rates are low, people can afford higher principal values.
When interest rates go up, the amount of a monthly budget that can go toward principal goes down.
Housing prices will tend to fluctuate to match what people can afford, and what people can afford is determined by their monthly payment.
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The majority of people base their housing budget on the monthly payment they can afford.
When interest rates are low, people can afford higher principal values.
When interest rates go up, the amount of a monthly budget that can go toward principal goes down.
Housing prices will tend to fluctuate to match what people can afford, and what people can afford is determined by their monthly payment.