When interest rates rise - what will happen to my property value??

5 Replies

If and when interest rates rise wouldn't it make my property go down in value? Does this affect single family? Multi family? 

I look at that as increasing my properties value since I am a buy and hold investor and it will mean it is harder for prospective tenants to buy a property themselves so there will be more demand for rentals.

If you are into flips it could be a bad time.

I would assume it's heavily affected by location. If your home is in an affordable area populated with first time buyers and lower income people than obviously interest rates increasing will make current prices less affordable and you'll have to adjust accordingly in order to sell. . 

They'll go down as defined by NOI / r - g, where r represents the required rate of return. This will go up as competing investments will increase in yield. I wouldn't be too turned off by changes in rates - the forward curve is benign, the change in value is only on a mark-to-model basis.

@Dave Alexander   

@Paul Ewing  

I'm a buy and hold. Low income area. So if interest rates rise that would be great for me. Although it'd be tougher to sell any 2 family at a good price more people would be forced to rent. 

Thanks 

I think thats a question that requires more info to answer.

The answer depends almost entirely on why interest rates would be going up.

Are rates going up because the economy is booming? If so, then inflation is going up. If inflation is going up then the price of homes are going up too.

So that would be my answer with the added assumption as to why interest rates are going up. If you can foresee some other reason why rates are going up and the economy is not booming, then I might want to reconsider depending on the reasons why rates were going up.

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