Where Will Interest Rates Go in 2012?

In one of my light-bulb moments, I discovered that (at least here in Louisville) unemployment has proven to be a bigger factor in determining home sales activity than traditional real estate metrics.

Chart of 30 year mortgage interest rates through 2012
Merely going back 10 years shows how attractive today’s mortgage interest rates are. When have rates ever been this low? Answer: Never.
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Unemployment Proves Bigger Factor in Louisville Real Estate Than Rates, Prices

Experts like Donald Trump and John Paulson have been touting the benefits of investing in real estate since October 2010. On this site, we’ve highlighted the very positive positions of the three key financial indicators for real estate:

  1. Interest rates
  2. Home prices
  3. Inventory
Chart of Metro Louisville Unemployment Rates, 2006-2011
Since late 2008, unemployment rates have jumped significantly. It is interesting that this coincides with the time frame in which Louisville real estate dropped.
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