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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Amy J who wrote (8782)2/9/2003 2:59:08 PM
From: Elroy JetsonRead Replies (1) of 306849
 
(1) in the 70's inflation, did real estate prices drop initially, when interest rates initially rose?
(2) then when inflation kicked into full gear, did RE prices inflect & run up as inflation went into full gear?


No and no. Interest rates tend to rise concurrently with inflation. I don't have my real estate price indexes with me right now, but historical Freddie Mac mortgage rates can be found at:

freddiemac.com

Based on annual averages the interest rate cycle was roughly:
1972 was 7.38%
1981 was 16.63%
2002 was 6.54%

Real estate peaked in 1989 and bottomed out in 1996.

There was more to the 1967 to 1989 rise than just a straight line, but I'd rather not do it from memory.
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