The US realty market seems to be in for a bad time. Both interest rates and realty prices are moving in unfavourable directions after having been favourable for a few years. The chief reason that has led to firmer interest rates is successive hikes in interest rates made by the US Fed. This hike has led to short term interest rates becoming almost aligned with long term interest rates and taking the steam out of ARMs.
Under a low interest rate regime and rapidly appreciating real estate prices, people could keep borrowing against their home and cashing out home equity. That time seems to be over for now. High interest rates on the one hand imply higher monthly outflows and softer property prices imply that additional borrowing is quite impossible. Both factors are working in tandem to cool the markets.
