You're right, and anyone buying a house today is banking on them staying low. But what other option do they have?

If interest rates go up to 6-7-8%...double digits, the housing market would be a bloodbath.

Happened in 1981:

Mortgage rates: https://themortgagereports.com/61853/30-year-mortgage-rates-...

Housing prices: https://inflationdata.com/articles/inflation-adjusted-prices...

Inflation-adjusted housing prices went down about 20%. Nominal home prices basically stayed constant for about 2 years, then resumed marching upwards.

Also note that the actual bloodbath happened from 2006-2012 (when the housing crash took prices down about 35%). It does not correspond to any major increase in interest rates. The primary driver seems to be foreclosures, which in turn was driven by ARMs and poor lending standards. Conclusion might be that interest rates just don't matter that much as long as a majority of people are on fixed-rate mortgages, while they can matter a lot if folks are on ARMs they can't afford. (Interestingly, we may get a similar crash of multi-family housing in the near future, since all the tenants not paying rent now is having a similar effect on mortgages.)

If interest rates go up 6-7-8%, inflation would give most people an almost free house. Rent it out instead of selling and you have income for life.

Eventually, but salaries tend to lag inflation. Also would depend how quickly rates went up.

Depends on your job. Professional/managerial salaries often lead inflation - if you're a financier, engineer, consutant, or CEO you've been raking it in over the last decade. Public servants, service & factory workers, and other commodity jobs lag inflation.

My mom was a teacher and said that when she graduated in college (late 60s), teacher salaries were maybe 20-30% below engineer/lawyer/professor salaries. By the time I was born (early 80s) her classmates in those professions were making 3x what she was.

It certainly would be, though it seems the Fed is committed to keeping rates low in perpetuity.

It's possible we hit a point where inflation ticks up due to recent stimulus/printing, and the Fed is forced to raise rates suddenly. The recent change to allow inflation to run past 2% indicates they're likely to let it run for a bit, though.

A low interest mortgage has a longer duration which means the probability is much higher.

Here in the U. S., specifically WA state, the shorter the mortgage, the lower the interest rate. For example, when we refinanced we could get 15 years @ 2.5% or 30 years @ 3%. In that case, the "low interest mortgage" was the 15 year mortgage.

So either one of us has some miscommunication, or things are different where you live.