How Will the Fed’s Rate Hike Affect Home Value Growth?

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One housing expert says the rate hike can spur home value declines in coastal markets like Seattle and San Francisco

November 23, 2015
How Will the Fed’s Rate Hike Affect Home Value Growth?

Data from Zillow shows that home values “are growing at the fastest pace since November of last year,” CNBC reports. As the central bank is showing signs of starting to withdraw its massive stimulus, the housing sector is prepping for a change.

“Perhaps sensing an impending end to the era of ultra-loose monetary policy, homeowners may be responding in kind, and defying the slowdown in the global economy,” writes CNBC’s Trent Gillies.

According to Svenja Gudell, the chief economist at Zillow, rate hikes mean value growth will cool off in expensive coastal markets such as San Francisco and Seattle, and perhaps even decline. “You can’t spend much more on a home once your buying power is reduced so much by higher rates,” she writes.

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